University of Mississippi eGrove American Institute of Certified Public Accountants Newsletters (AICPA) Historical Collection

1945 Certified public Accountant, 1945 American Institute of Accountants

Follow this and additional works at: https://egrove.olemiss.edu/aicpa_news Part of the Accounting Commons, and the Taxation Commons

Recommended Citation American Institute of Accountants, "Certified public Accountant, 1945" (1945). Newsletters. 79. https://egrove.olemiss.edu/aicpa_news/79

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

V o l. 25 J a n u a r y , 1945 No. 1

New Selective Service Rules Local Board Memorandum No. 115-I, duction or in an activity in support of released by National Headquarters of the the national health, safety, or interest, Selective Service System, December 12, which local boards were encouraged to 1944, has been reproduced in pamphlet interpret liberally. form and mailed to all members and asso­ It is an announced objective of the new ciates of the American Institute of Ac­ memorandum to induce men now engaged couritants. This memorandum indicates a in essential work to remain there, and new urgency in the demand for man­ men not now engaged in essential activ­ power, both by the armed forces and in ities to find essential work. Accordingly, war production. It calls for a stricter provision is made for immediate reclassi­ application of classification policies than fication of any registrant now in a that which has prevailed since the issu­ deferred status who changes employment ance of Local Board Memorandum No. without approval of his Selective Service 115, as amended May 12, 1944, in which local board. Registrants aged 26 through classification in deferred classes of regis­ 29 will probably be considered for occu­ trants ages 18 to 26 was rigorously re­ pational classification only if engaged in stricted, but at the same time was broad­ one of a limited number of “critical” ened in the case of registrants ages 30 activities listed in a War Manpower through 37, while registants ages 26 Commission release of January 16, 1945. through 29 were given an intermediate Selective Service local boards at the pres­ status. Under the provisions of the new ent time will reclassify men between ages release, in applying tests for occupational 30 and 37 in deferred classifications who deferment for men in the older groups, without board approval leave jobs in greater consideration will be given to essential establishments. In view of the those engaged in war production or in present urgent manpower need, it may be support of the war effort than to those that local boards will review the classi­ engaged in activities not immediately sup­ fications of older men, even though they porting the prosecution of the war. Un­ do not change their posts, if they were der the policy announced last spring, a formerly classified under a liberal inter­ registrant in the higher age group was pretation of “activity in support of the available for occupational deferment if national health, safety, or interest,” and he were regularly engaged in war pro­ such registrants may be reclassified if

PUBLISHED BY AMERICAN INSTITUTE PUBLISHING CO., INC. 13 East 41st Street, New York 17, N. Y. 2 The Certified Public Accountant they are not now found, under a stricter list of essential activities released by the interpretation, to be engaged in “‘activ­ War Manpower Commission, January ities in support of the war effort.” 16th, will be used as a guide by local In determining what is essential work, boards. This list contains the item, local boards are now instructed to con­ “Technical, scientific, and management sider general information available, services,” which the War Manpower specific information in the registrant’s file, Commission has held to include account­ representations by other federal govern­ ing services rendered to essential estab­ ment agencies, and the local board’s own lishments. Accounting firms which have knowledge of the relative importance of not yet applied for classification as essen­ civilian activities and the labor-supply tial establishments by area offices of the conditions existing in the area in which War Manpower Commission should con­ the registrant is working. Presumably the sider the advisability of doing so.

Contract Termination Courses CPA Examination Schedule Among the courses in war - contract termination recently announced is one State accounting boards adopting offered by Western Reserve University the uniform examinations prepared of Cleveland. This course consists of two by the American Institute of Ac­ three-hour sessions each week for a countants will hold the regular spring period of five weeks. Laws, regulations, examinations on May 16, 17, and 18, and procedures applicable to contract 1945, according to the following termination are explained by speakers and schedule: discussion leaders representing both in­ Wednesday, May 16th: 1:30 to dustry and the government, and an 6:00 P.M. — Accounting Practice, opportunity is provided for considera­ Part I. tion of specific cases and individual prob­ lems. The first course opened on Sep­ Thursday, May 17th: 9:00 A.M. to tember 25th, with a registration of 118. 12:30 P.M.—Theory of Accounts. It was repeated, beginning on November Thursday, May 17th: 1:30 to 13th, at the urgent request of many who 6 :00 P.M.—Accounting Practice, had enrolled in the initial program. Part II. Friday, May 18th: 9 :00 A.M. to Accounting Problems for Lawyers 12:30 P.M.—Commercial Law. The American Institute of Accountants Friday, May 18th: 1:30 to 5:00 and the New York State Society of Certi­ P. M.—Auditing. fied Public Accountants are cooperating with the Practising Law Institute, at the The board of examiners of the invitation of that organization, in con­ American Institute has approved the ducting an advanced course on current following dates for future examina­ problems in accounting for lawyers. This tions : program will consist of a series of twelve November 7, 8, and 9, 1945. weekly lectures to be given in New York City in the spring of 1945. All account­ May 15, 16, and 17, 1946. ants and lawyers are eligible to attend. November 6, 7, and 8, 1946. Further details will be published in a later issue of this bulletin. The Certified Public Accountant 3

Secretary’s Notes

A W orld P r o f e s s io n lines by certified public accountants en­ At a meeting of the Institute’s exec­ gaged in the practice of their profession. utive committee, December 7th, a bold It is consistent, too, with the action of step was taken in the adoption of a reso­ the executive committee and the council lution recommending that a qualified pro­ of the Institute at the time of the annual fessional accountant of any country, or meeting last fall, in approving regulatory of any state in the United States, should accounting legislation, subject to the pro­ be permitted to practice his profession vision that restrictions on the interstate without hindrance in other countries or practice of accounting be eliminated. other states. The text follows: However, the resolution quoted above did not arise from a discussion of inter­ “RESOLVED, In the belief that the state, but rather of international practice. national and international economy will On November 14, 1944, the secretary and be well served, and the interest of the accounting profession in all countries will counsel for the Institute had conferred be advanced, by provision for free passage with officials of the State Department of qualified professional accountants about what seemed to be a growing across state and national boundaries, the tendency among Latin American Repub­ executive committee of the American In­ lics and some other countries to enact stitute of Accountants recommends: legislation which might prevent certified “That a certified public accountant of public accountants of the United States any state or territory of the United States from carrying out professional engage­ or of the District of Columbia, whose ments in those countries. The conferees certificate was obtained under acceptable at that time were unaware that the day professional standards, be permitted to practice his profession freely in any other before, the Republic of Cuba had enacted state, subject to such requirements as to such legislation. When this was learned, registration and payment of fees as may the executive committee gave serious con­ be required by law, and may describe him­ sideration to the whole problem. As the self as a certified public accountant of State Department had pointed out, it was the state, territory, or District which clear that any discussion of the matter issued his certificate; and with governments of foreign countries “That a qualified professional account­ would lead to the question of reciprocity, ant of a foreign country in possession of which involves the policy of the several a certificate, license, or degree which authorizes him to practice public account­ states of the United States toward the ing in his own country, issued under admission of qualified accountants from acceptable professional standards, be per­ foreign countries (the subject was dis­ mitted to practice his profession freely cussed editorially in The Journal of in any state, territory or District of the Accountancy for January, 1945, page 1). United States, subject to such require­ • Under instructions of the executive ments as to registration and payment of committee, the secretary has prepared a fees as may be required by law, and may lengthy memorandum analyzing existing use the title under which he is registered accountancy laws as they may apply to in his own country provided the country of its origin is indicated.” foreign accountants and containing other data, which has been submitted to the This recommendation may seem revolu­ State Department. It is expected that fur­ tionary to some accountants, but it is en­ ther conferences will result. tirely consistent with the official policy of In the meantime, the status of foreign the Institute, in effect for more than fif­ accountants is being considered in rela­ teen years, to encourage removal of all tion to the revised draft of the Institute’s barriers against free passage across state model regulatory accountancy bill now be­ 4 The Certified Public Accountant fore the committee on state legislation, of the Rules of Professional Conduct of and is being recommended for considera­ the American Institute of Accountants as tion by state societies now studying the applied to listings in directories. In Sep­ subject of regulatory legislation. tember, 1944, the chairman of the com­ mittee on professional ethics of the chap­ A id t o R e t u r n i n g V e t e r a n s ter directed the attention o f all members The Institute has sought the coopera­ to this in relation to telephone-direc­ tion of state societies in planning to ren­ tory listings, and suggested that all mem­ der the full possible measure of assistance bers now using bold-type listings in to accountants returning from the armed telephone directories instruct the direc­ forces who wish to enter the practice of tory to discontinue such listings. When public accounting. With the approval of the chapter first addressed its members on the executive committee, a letter has been this subject, 46 members used bold-type sent to each state society president, re­ listings. Within a short time the chair­ questing the appointment of a committee man of the committee received from all on cooperation with veterans, including these members copies of letters to the pub­ a member in each important city. A pro­ lishers, requesting discontinuance of the gram of activity is being suggested to bold-type listings. such committees as they are appointed. Six state society committees on coopera­ I n s t i t u t e M e m b e r s h ip tion with veterans are already in ex­ A recent analysis of the membership istence. of the Institute shows that at August 31, T he program includes a survey of job 1944, the end of the past fiscal year, 51.8 opportunities in public accounting offices, per cent of all members and associates cooperation with official agencies in ren­ were partners of public accounting firms dering vocational guidance and placement or sole proprietors of public accounting service, and assistance in making provi­ practices. In 1942, 54.2 per cent of the sion for adequate retraining facilities for whole membership were in this classifica­ veterans who wish to enter the public tion; 16.2 per cent of the members and accounting field. associates were staff assistants in public accounting offices in 1944, as compared L a w y e r s a n d C e r t if ie d P u b l ic with 19.3 per cent in 1942. A c c o u n t a n t s An increase appears in the proportion The third meeting of the National Con­ of members and associates in the employ ference of Lawyers and Certified Public of private corporations from 13.3 per cent Accountants is scheduled to be held at in 1942 to 15.3 per cent in 1944. This Washington, D. C., early in May. A sub­ reflects the increasing number of certified committee has been appointed to study public accountants not in public practice regulatory accounting legislation, in who have been admitted as associates of which the lawyer members of the Con­ the Institute in recent years. The propor­ ference have shown a keen interest. A tion in government service as civilians has proposed program of cooperation between remained fairly stable at a little more than local organizations of lawyers and certi­ 3 per cent, and also the number teaching fied public accountants will also be given in schools and universities, at a little more further consideration. than 1 per cent. The most significant change shows in L is t in g s i n D ir e c t o r ie s the proportion in military service, which Members of Pittsburgh Chapter of the in 1944 was more than 10 per cent, while Pennsylvania Institute of Certified Pub­ in 1942 it was a little less than 6 per cent. lic Accountants are to be congratulated An analysis shows that approximately 75 on their 100 per cent compliance with per cent of those in military service in the official interpretation of Rule No. 10 1944 came from the members in public The Certified Public Accountant 5 accounting practice, which accounts in pared the 1943 and 1944 reports issued large part for the percentage decrease in by the committee on depreciation of the that category since 1942. National Association of Railroad and A program of activities for the member­ Utilities Commissioners. ship committee during the balance of the The committee on cooperation with the Institute’s current fiscal year is outlined in Securities and Exchange Commission a recent letter from chairman C. L. John­ held a meeting at the Institute’s office on son to committee members. No intensive December 15th. campaign is planned, but every non­ member certified public accountant of O f f ic e r s a n d S t a f f good standing will be informed concern­ The January, 1945, issue of The Office, ing the advantages of Institute member­ a magazine devoted to office-equipment ship. Former members who have interests, contains an article by Presi­ resigned, or whose membership has ter­ dent Samuel J. Broad entitled “Office is minated under automatic provisions of the Headquarters for All Industry’s Varied by-laws, will be reminded of the proce­ Operations.” dure for reinstatement. William Charles of St. Louis, Missouri, At August 31, 1944, there were 5,954 representing the American Institute as members and 2,042 associates. At Janu­ co-chairman of the National Conference ary 1, 1945, there were 6,095 members of Lawyers and Certified Public Account­ and 2,185 associates—a total of 8,280. ants, discussed the present program for In the past three years, there has been cooperation between the Institute and the an annual net increase in membership American Bar Association, at a meeting averaging 760. Within the next few of the Ohio Society of Certified Public years, it is hoped that at least a majority Accountants on December 1st. of all qualified certified public account­ Thomas W. Leland, educational direc­ ants will be members of the Institute. tor, discussed the Institute’s educational activities at a meeting of accounting stu­ C o m m it t e e s dents at the College of the City of New The executive committee of the Insti­ York on December 7th. Professor J. W. tute held a meeting in New York on Neuner is faculty adviser to this group. December 7th. Frank A. Gale, assistant secretary, at­ The committee on social security held tended the war-contract termination con­ a meeting in Baltimore on December 9th. ference presented by the Delaware The Director of the Bureau of Old Age Accountants Association, in cooperation and Survivors Insurance, the Assistant with the American Institute of Account­ Director, and two members of the actu­ ants and the United States Army and arial staff of that organization partici­ Navy, in Wilmington on December 20th. pated in the discussion. The secretary discussed the history of Homer N. Sweet, chairman of the Insti­ the American Institute, and its present tute’s advisory committee on investment and future plans, at a meeting of the company accounting, and Harry I. Pran­ District of Columbia Institute of Certified kard, a member of that committee, dis­ Public Accountants on December 18th. cussed the proposed revision of Article 6 He spoke on “The Role of the Accountant of Regulation S-X, relating to manage­ in the Postwar Period” at a meeting of ment investment companies, with repre­ New Hampshire Chapter, NACA, in sentatives of the Securities and Exchange Manchester on January 9th. Commission at the SEC offices in Phila­ The pension plan for members of the delphia on December 6th. Institute staff adopted in May, 1944, has At a meeting of the committee on been formally approved by the Treasury public-utility accounting in New York, Department. on December 6th, George O. May com­ J. L. C. 6 The Certified Public Accountant

Journal of Accountancy and in papers Research Department presented at the Institute's 1944 annual meeting in St. Louis. The subcommittee Since the meetings of the committee on on stock options is considering the gen­ auditing procedure and the committee on eral conclusions upon which a possible accounting procedure on December 13th bulletin may be based. Some of the prob­ and 14th, respectively, the research de­ lems involved are: “Do all stock options partment has been assisting in the re­ have value regardless of the relation of lease of the bulletins on income taxes and the option price to the market price of intangibles and in the organization of the shares?”, “When should options be program plans for the new committees. recorded and at what value?”, “What is an investment option?”, etc. Other sub­ A u d i t i n g P r o c e d u r e jects under review by the accounting pro­ The committee on auditing proce­ cedure committee include: quasi-reor­ dure has set up subcommittees to ganizations, surplus, current assets and study: (1) revision of Examination of current liabilities, and cost and value. Financial Statements by Independent Letters from committee members con­ Public Accountants, (2) revision of the tinue to evidence interest in the problem standard short form of auditor’s report, of war reserves, and it is probable that and (3) the accountant’s responsibility this subject will be included in the agenda on security registrations. Important parts for the next meeting of the committee. of Examination of Financial Statements Two Accounting Research Bulletins were have been superseded by various state­ distributed to members of the American ments of the auditing committee and it Institute in December. was recommended that a statement of that fact be attached to all copies of the S u b je c t s f o r S t u d y pamphlet remaining for sale. Some cor­ Both committees have adopted a plan respondence has been received relating of procedure which authorizes the com­ to the interpretation of the term “gener­ mittee chairmen and the director of re­ ally accepted accounting principles” in search to introduce topics for considera­ the auditors’ certificates, as requiring tion. Institute members who have sug­ established precedent in accounting proce­ gestions for the committees are asked to dures, and its possible effect as a bar to address them accordingly. any development or evolution of account­ Numerous letters have been addressed ing procedures or principles. A report to the research department asking a wide of a previous subcommittee on the ac­ variety of accounting and auditing ques­ countant’s responsibility on security regis­ tions. The department cannot undertake trations which appeared in The Journal to answer questions relating to special of Accountancy for May, 1944, is being problems arising in particular cases. Any used as a basis for a statement to be subjects that are sufficiently broad in prepared for submission to the full com­ scope will be studied by the research de­ mittee for approval. Comments of Insti­ partment and submitted to the appropriate tute members on these points will be committee. Expressions of opinions and referred to the appropriate subcommittee. interpretations by the department will be limited to those matters with respect to A c c o u n t in g P r o c e d u r e which one of the committees has taken a A proposed bulletin on termination of position. The Institute’s bureau of infor­ war contracts considered at the Decem­ mation is authorized to deal with ques­ ber 14th meeting has been revised and tions and problems involving routine released to the committee on accounting techniques and procedures and should be procedure for ballot. It is generally in used for that purpose. line with statements on the subject which C a r m a n G. B l o u g h , have been made in recent articles in The Director of Research. The Certified Public Accountant 7 ______

mental accounting. In general, the replies Educational Department indicate that the state boards feel that too much emphasis has been given to this M u n i c i p a l P r o b l e m s i n E xaminations subject in recent examinations. Following the instructions of the board It is the intention of the board of ex­ of examiners, letters have been written aminers of the Institute to give careful to state boards using the uniform exam­ consideration to replies to the question­ ination prepared by the American Insti­ naire and to conform to the requirements tute of Accountants to ascertain the and preferences in so far as possible. nature of the requirements and prefer­ ences relating to the use of municipal B oa rd o f E x a m i n e r s questions and problems in the examina­ The board of examiners met at the tions. Replies have been received from offices of the Institute on December 4, twenty-one state boards and it is hoped 1944. Mr. Henry E. Mendes was unani­ that the secretaries of state boards who mously elected chairman for the fiscal year have not submitted the requested infor­ 1944-1945. mation will do so at an early date. The board adopted rules and procedures The first question asked the state for the guidance of the educational di­ boards was: Is there a legal require­ rector and the examiners in the work ment of municipal accounting questions of grading examination papers. The board or problems? If so, what is the specific also adopted a policy covering proce­ requirement? Of the replies received to dure and responsibilities in the prepara­ date, only two states, Oklahoma and Colo­ tion of the uniform examination. Under rado, have indicated a legal requirement this policy, the educational director is re­ for examination in municipal accounting. sponsible for submitting to the board Oklahoma uses a separate examination complete drafts of examinations in all covering the subject. subjects, at least six months prior to the The second question was: Would a date of each examination. Subcommittees theory question or an auditing question of the board were appointed. The educa­ relating to municipal accounting satisfy tional director was instructed to consult the requirement, or is it necessary that these subcommittees with respect to the the examination in accounting practice examination subjects to which they were include a municipal accounting problem? assigned. Some of the state boards prefer that Action was also taken to make possible the content in governmental accounting be a more rapid handling of applications for in the form of an accounting problem, but membership in the Institute. a number of states indicate that they prefer a question on the subject in either C o m m it t e e o n S e l e c t io n o f P e r s o n n e l the accounting theory or auditing exam­ The committee on selection of person­ ination. nel met in New York on December 12th. The third question was: If there is no Dr. Ben D. Wood, who is supervising legal requirement relating to a content the Institute’s project on selection of per­ dealing with governmental accounting, sonnel, reported that he had visited West­ what is the attitude of your state board ern Reserve University and the University concerning the frequency of municipal of Michigan; and that he planned to visit accounting questions and problems and the University of Ohio, the University of the relative desirability of theory and Illinois, Northwestern University (Illi­ auditing questions or problems in ac­ nois), and the University of Pennsyl­ counting practice dealing with this sub­ vania, for the purpose of discussing ject? State boards replying to this ques­ achievement tests and taking advantage tion expressed preference for occasional of any work done by educators in these use of questions and problems in govern­ schools in the development of such tests. 8 The Certified Public Accountant

The committee members indicated their approval of Dr. Wood’s plan to keep in Public Information Department touch with these schools and to establish contact with others for the same purpose. T e r m i n a t i o n C o n f e r e n c e s The committee approved a plan outlined Cooperation in arrangements for war- by Dr. Wood for further work toward contract termination conferences of state the establishment of a profile of interests societies of certified public accountants of certified public accountants. It also and other groups was included in the gave further consideration to the work of work schedule of the public information developing intelligence and achievement department for December. Six confer­ tests. ences were held in that month and two It was announced that approximately were scheduled for January. 2,000 accountants have filled out and sub­ The Institute’s part included the actual mitted for scoring the Strong Vocational “booking” of conferences; securing the Interest Blank. assignments of Army and Navy officers to serve as panel members at the meet­ V e t e r a n s ’ E d u c a t io n ings; furnishing of standard questions to The educational director recently dis­ conference chairmen, and of base refer­ cussed with officials of the Veterans Ad­ ence material to members of the profes­ ministration and the War Manpower sion discussing the responsibilities of the Commission, in Washington, the Insti­ certified public accountant in termina­ tute’s refresher-course program which is tions; preparation and distribution of described elsewhere in this issue. Both advance and follow-up publicity releases groups indicated an interest in this for newspapers and press associations in project and expressed the opinion that conference cities and states. it would be helpful to their organizations. Conferences were held in December in Dr. McKee Fisk of the Veterans Admin­ Jacksonville, Denver, Columbia, S. C., istration, specialist in business education, San Francisco, Birmingham, and Wil­ cited some interesting figures. He said mington, Del., and similar meetings are that approximately 8,000 disabled vet­ scheduled for Cleveland and Milwaukee erans are now enrolled in training pro­ in January. With the help of the depart­ grams and that about 5,000 of them are ment, war - contract termination con­ taking college training. Of the latter ferences were also held in Boston, group, he estimated that about one-fifth Indianapolis, and Chapel Hill, N. C., in are enrolled in accounting courses. He November. also stated that approximately 9,600 GI’s are taking courses and about 7,700 of S p e c ia l M a i l i n g s them are enrolled in colleges and profes­ Other activities of the department in­ sional schools. cluded preparation and mailing of mem­ Any honorably discharged veteran with oranda and other communications relating ninety days of service (excluding time to activities of the American Institute assigned to educational and training pro­ and its committees. To a large list of grams while in the service) is eligible for federal government officials, association a one-year refresher or retrainer course. executives, and editors copies of the The Veterans Administration will pay for proceedings of the 1944 annual meeting each qualified veteran a tuition cost not of the American Institute were distrib­ to exceed $500 for each regular school uted. year and, under certain circumstances, Further, the printed text of recom­ provide additional financial assistance. mendations of the committee on federal T. W. Leland, taxation for revisions in the Internal Educational Director. Revenue Code was sent to members of The Certified Public Accountant 9

Congressional committees, officials of the Treasury Department, executives in na­ Tax Department tional tax and other groups, and to edi­ tors of business and daily papers. The I n c e n t i v e D epreciation full text of an address on “Accounting Problems of Small Business” by J. A. Considerable interest has been stimu­ Phillips was sent to the chairman of lated in tax circles by the statement re­ and delegates to the sixth annual ses­ cently released by the chairman of the sion of the Conference of American Small Institute’s committee on federal taxation, Business Organizations. Maurice Austin, regarding current pro­ posals for arbitrary incentive depreciation P u b l ic it y tax allowances on new equipment. In In December, activities of this depart­ pointing out the basic weaknesses of such ment resulted in the publication of several proposals, Mr. Austin stated that perhaps notable news items in The New York the strongest objection is “that the econ­ Times and elsewhere. One of these was omy as a whole is bound to suffer in the based on an interview with the chairman long run from artificial distortions of of the committee on federal taxation on income for tax purposes.” the subject of accelerated depreciation. An editorial in the New York Journal of E x p e d i t in g R e f u n d a n d C a r r y -b a c k Commerce was based on the news report C r e d it s of this interview. The subject of expediting refund and On the basis of information furnished carry-back credits is receiving careful by the department, The New York Times consideration by the committee on federal published an authoritative article on the taxation. Several recent proposals offered subject of tax-accountancy developments. by various groups on the subject are A representative of the same paper in­ being reviewed. This topic is the subject terviewed the director of research of the of an editorial to be published in The American Institute to secure authorita­ Journal of Accountancy for February, tive information on the subject of re­ 1945. pricing war contracts. P o s t w a r T a x a t io n R ecommendations N a t u r a l B u s i n e s s Y e a r E n d o r sed Part of the responsibility of the public Albert Dixon, Jr., Institute member information department extends to pro­ from Connecticut, has advised that the motion of the natural business year. Finance and Taxation Committee of the In December the department was instru­ Manufacturers Association of Connec­ mental in bringing about the removal ticut, at a meeting November 30, 1944, from a bill in Congress of a provision unanimously approved the postwar taxa­ requiring new small corporations to keep tion recommendations of the Institute’s their accounts on the calendar-year basis. committee on federal taxation. The department furnished base material about the natural business year to the T a x S implification R ecommendations office of the Select Committee on Small The Republican Postwar Tax Study Business of the United States House of Committee in a preliminary report re­ Representatives, and helped in making viewing recommendations made to it by arrangements by which the chairman of 112 professional and business groups the committee on federal taxation will listed the “Recommendations for Revision testify at hearings to be held by that of the Internal Revenue Code” by the committee. committee on federal taxation as one of F r a n k A. G a l e , the six major tax plans or studies which Assistant Secretary. had been received. 10 The Certified Public Accountant

The report emphasized the Institute’s plea for tax simplification, and quoted Institute Library from the text as follows: “the basic cry­ ing need is for a complete overhauling of our federal tax laws, and their recon­ Following are the titles of volumes re­ struction and recodification along simpli­ cently added to the circulating division of fied lines, expressing a permanent and the American Institute library: consistent policy of federal taxation.” Alford, L. P., and Bangs, J. R., ed. Pro­ Effort to establish a nonpartisan tax duction Handbook. 1944. Ronald Press commission to achieve this goal continues Co, New York, N. Y. to be one of the main objectives of our Bickford, Hugh C. Excess Profits Tax tax committee. Relief; an Interpretation of Section 722 R e b e c c a N e w m a n G o l u b , of the Internal Revenue Code. 1944. Technical Assistant to the Prentice-Hall, Inc., New York, N. Y. Committee on Federal Taxation. Clark, John M. Demobilization of W ar­ time Economic Controls. 1944. Mc­ Graw-Hill Book Co., New York, N. Y. Members of the Institute Greer, Howard C., and Smith, Dudley. In War Activities Accounting for a Meat Packing Busi­ Guy E. Dance, Fort Worth, Texas—En­ ness. 1943. Institute of Meat Packing, sign, USNR. University of Chicago, Chicago, Ill. William H. Davis, Syracuse, N. Y.— Harris, Walter O. Institutional Cost Ac­ Major, U. S. Army. counting. 1944. Public Administration Allen E. Murison, Radford, Va.—Ensign, Service, Chicago, Ill. USNR. Knowles, Asa S., and Thomson, Robert Kenneth C. Tiffany, Detroit, Mich.— D. Industrial Management. 1944. Accounting Associate, Office of Con­ Macmillan Company, New York, N. Y. tract Settlement. Institute of Internal Auditors. Internal Auditing Philosophy and Practice; a Symposium of Papers and Addresses Presented During the 1942-1943 Sea­ Big 1944 News son of the Institute of Internal Audi­ tors. 1944. Brock and Wallston, Stam­ Important news events of last year, ford, Conn. as reported in its review of 1944 by Lang, Theodore, ed. Cost Accountants' the Chicago Journal of Commerce: Handbook. 1944. Ronald Press Co., “Jan. 17.—American Institute of New York, N. Y. Accountants says corporate profits Louden, J. K. Wage Incentives. 1944. look bigger than they actually are be­ John Wiley and Sons, Inc., New York, cause many companies failed to pro­ N. Y. vide for reconversion.—Churchill re­ ported in agreement with de Gaulle Montgomery, Robert H. Federal Taxes on part French will play in invasion on Estates, Trusts and Gifts, 1944-45. of Continent.” Ronald Press Co, New York, N. Y. Basis for the above recognition of Montgomery, Robert H. Federal Taxes accountancy as a source of news: re­ on Corporations, 1944-45. 2 volumes. port on a study into corporate profits Ronald Press Co, New York, N. Y. by the research department of the Sunley, William T , and Carter, William American Institute, released to news­ J. Corporation Accounting. 1944. Ron­ papers and press associations by the ald Press Co, New York, N. Y. public information department at In­ Tax Diary for 1945. Prentice-Hall, Inc., stitute headquarters. New York, N. Y. H e l e n M. J o h n s t o n e , Librarian. The Certified Public Accountant 11

Refresher Course 3. Income statement. Robert W. Wil­ liams. A refresher course, to assist returning 4. Surplus. Eric L. Kohler. veterans who have had some experience 5. Investments and funds. Hiram T. in public accounting to review develop­ Scovill. ments while they have been in the service 6. Fixed assets. William D. Cranstoun. and orient themselves in conditions of 7. Intangible assets. Walter A. Staub. 8. Special items arising out of the war. present-day practice, has been arranged George D. Bailey. by the committee on refresher courses 9. Long-term debt and capital stock. of the American Institute of Accountants George O. May. with the assistance of Thomas W. Leland, educational director. This course, which IV. Auditing Procedure is intended for public accountants at the 1. Changing concepts and procedures. semi-senior or senior level, will not re­ Samuel J. Broad. view basic accounting and auditing theory. 2. New techniques. Victor H. Stempf. It will be presented in a series of chapters. 3. Audit programs and questionnaires. Each chapter will be written by an author Raymond E. North. selected because of his proficiency in the 4. Working papers. Raymond E. subject discussed, and printed as an indi­ North. vidual pamphlet. These pamphlets, which 5. Receivables. Maurice H. Stans. 6. Inventories. C. Oliver Wellington. are expected to be completed before the summer of 1945, will be available for V. Federal Taxation brief, intensive residence courses for staff- training programs of public accounting 1. Major legislative changes and judi­ firms, and for home study. A complete list cial decisions since 1939. Maurice Austin. of titles and authors follows: 2. Changes in determination of taxable gross income, including capital I. Introduction gains and losses. Charles Melvoin. 1. The Institute’s program of refresher 3. Changes in deductions and credits. studies for veterans. Thomas W. Henry B. Fernald. Leland. 4. Changes in taxation of corporations (other than the determination of II. Government Relations with Business gross income and deductions). 1. War contracts. Carman G. Blough. Mark E. Richardson. 2. Wage and salary controls. 5. Changes in tax procedures and prac­ (a) Wage and Salary Stabilization. tice. J. K. Lasser. David C. Anchin. 6. Income taxation of trusts and (b) Wages and Hours. Raymond estates (other than covered by 2 G. Ankers. and 3). Marquis Eaton. 3. Price and inventory control, priori­ 7. Taxes on transfers by gift or in­ ties and allocations. Albin D. heritance. Walter A. Hurley. Strandberg. 4. Postwar conversion and surplus VI. Accounting Systems and Other property. Joseph B. Baerncopf. Subjects 5. Wartime and postwar financing, re­ 1. Accounting systems. Eric A. Cam­ strictions of consumer credit. Milo man. B. Hopkins. 2. Cost accounting. Harry E. Howell. 6. SEC requirements. William W. 3. Budgets and budgetary control. Werntz. Prior Sinclair. 4. Reports. John H. Zebley, Jr. III. Accounting Principles 5. Utility regulation. Henry A. Horne. 1. Progress in development of basic 6. Investment trust accounting. Harry concepts. Thomas W. Sanders. I. Prankard. 2. Balance-sheet. William A. Paton. 7. Bankruptcy law. Charles J. Banks. 12 The Certified Public Accountant

News About Institute Members Corps, United States Naval Reserve, have recently been released from active duty. N a v y A w a r d Captain N. Loyall McLaren, a former The Distinguished Civilian Service president of the Institute, will resume the Award has been presented by Secretary practice of public accounting as a part­ of the Navy Forrestal to Paul Grady, ner of McLaren, Goode & Co., in San chairman of the committee on auditing Francisco. Captain J. Harold Stewart, a procedure of the American Institute of member of the Institute council, has ac­ Accountants and a partner of Price, cepted the civilian position of Accounting Waterhouse & Co., New York. The Adviser to the Director of Contract Set­ citation accompanying this award reads tlement. Lt. (j.g.) George N. Farrand, as follows: formerly research assistant on the Insti­ “For exceptional performance of out­ tute staff, will be associated with Mr. standing services to the United States Stewart as Assistant to the Accounting Navy, as Executive Assistant to the Di­ Adviser, Office of Contract Settlement. rector of the Cost Inspection Service of Captain McLaren served the Navy as the Navy Department from April, 1942, Chairman of the New York Division to February 1, 1943, and thereafter until Price Adjustment Board. Captain Stew­ April 15, 1943, for making extremely art and Lt. Farrand will continue to valuable accounting surveys. perform in a civilian capacity the services “During this period, Mr. Grady played an important role in the reorganiztion they had been rendering for several of the Cost Inspection Service of the months in the Office of Contract Settle­ Bureau of Supplies and Accounts to adapt ment. it to meet the new burdens and responsi­ NAM P r e s id e n t bilities incident to the expansion of the Navy’s procurement program. By virtue Ira Mosher of Southbridge, Massachu­ of Mr. Grady’s outstanding ability and setts, a member of the American Institute example of self sacrifice and high pro­ of Accountants, was elected president of fessional standing, he was able to recruit the National Association of Manufac­ from the public accounting profession turers at its annual meeting early in De­ professionally trained accountants who cember. Mr. Mosher, now president of have likewise made a splendid contribu­ tion to the efficiency of the Navy. the Russell Harrington Cutlery Co. of “Mr. Grady played a large part in stim­ Southbridge, was for more than a decade ulating the program of conversion from vice-president and general manager of cost-plus-a-fixed-fee type contracts to American Optical Co. He began his bus­ fixed-price contracts. He also made for iness career as a bookkeeper and holds the Under Secretary a most comprehen­ one of the first CPA certificates issued sive and valuable survey of the Navy in Massachusetts. During his administra­ accounting system. tion as president of Associated Industries “By his leadership, technical ability, of Massachusetts, beginning in 1941, that engaging personality, and wholehearted organization formed the War Production devotion to his task, Mr. Grady earned the respect and admiration of all with Council for the purpose of increasing whom he came in contact and has dis­ war activity in industries in the state. tinguished himself during this critical S t a t e A u d it o r period of the Navy’s greatest expansion in a manner deserving of the Navy’s John D. Morrison of Marquette, Mich­ highest civilian award.” igan, a partner in Morrison Audit Co. and a member of the American Institute R e l e a s e d f r o m A c t iv e D u t y of Accountants, was recently elected Three members of the American In­ Auditor General of the State of Michi­ stitute of Accountants, formerly serving gan. Press reports stated that Mr. Morri­ as commissioned officers in the Supply son was “probably the first trained ac­ The Certified Public Accountant 13

countant to be Auditor General in the “W h e r e a s : an Interim Committee for state’s history.” Fiscal Legislation has been authorized by the state legislature and appointed by the B oa rd o f E d u c a t io n Governor of Wyoming, which committee Andrew G. Clauson, Jr., of New York, is conducting studies of the finances of a partner in Bayer & Clauson and a the state, its system of accounting, expen­ member of the American Institute of ditures, auditing, etc., and will recommend Accountants, has recently been appointed to the 1945 state legislature of the State of Wyoming such amendments of existing a member of the New York City Board laws and such needed new legislation as of Education. would put into effect in the State of Wyoming a modern system of accounting and financial control, and Ada P. Bowen “W h e r e a s : the Wyoming Society of Ada Pearl Bowen, former assistant sec­ Certified Public Accountants believes that retary of the Institute, died suddenly a modern system of accounting and finan­ cial control is urgently required in the January 6, 1945, at her home in Forest public interest and that amendatory and Hills, Long Island, New York. Mrs. new legislation is necessary to put such Bowen joined the staff of the Institute in control into effect: 1917. She became secretary to A. P. “Be It Resolved, that the Wyoming So­ Richardson, then secretary of the Insti­ ciety of Certified Public Accountants tute, and later was appointed assistant to urges the twenty-eighth state legislature the secretary which post she held for to give serious consideration and delibera­ many years. In 1935 she was elected tion to the passage of the necessary legis­ assistant secretary. lation : "And Be It Further Resolved, that it is Among other duties, she had an impor­ the opinion of the Wyoming Society of tant part in the arrangements for the Certified Public Accountants such legis­ annual meetings of the Institute, where lation should have as its fundamental many members met her. She resigned objectives the establishment o f: because of ill health in 1937, after twenty “(1) Uniform systems of accounts for years of devoted and indefatigable service the state and all subdivisions thereof, to the Institute. “(2) Adequate standards of auditing and reporting procedures with appropri­ Murray M. Mern ate provisions for fixing and delegating Official notification has been received responsibility to achieve these ends.” from the War Department, as this bulle­ tin goes to press, that Private Murray M. Massachusetts Society Appoints Mern, Jr., of New York, N. Y., who left Accounting and Auditing the employ of the American Institute of Accountants to join the United States Committee Army, in February, 1943, was killed in Appointment of a new committee on action on the Italian front in Febru­ accounting and auditing procedure has ary, 1944. Private Mern was previously recently been announced by the president reported as missing in action. of the Massachusetts Society of Certified Public Accountants. Responsibilities as­ signed to this committee include review­ Resolution on Fiscal Legislation ing accounting research bulletins and The following resolution referring to statements on auditing procedure issued proposed legislation relating to account­ by the American Institute of Account­ ing and auditing systems of the State of ants; responding to inquiries on account­ Wyoming was adopted by the Wyoming ing and auditing procedure from other Society of Certified Public Accountants committees and society members; and at its annual meeting, December 8th: arranging technical discussions. 14 The Certified Public Accountant

of Columbia Institute’s meeting on De­ State Society News cember 18th was “A Review of the Past and Plans for the Future.” Highlights in the history of the organization were re­ Taxation commanded the attention of viewed by Wayne Kendrick and Henry S. certified public accountants at most meet­ Owens, past presidents. At M ichigan ings recently held by state societies and Association’s meeting in Detroit on their chapters. Rhode Island Society January 11th, George D. Bailey, chairman was among the organizations participat­ of the American Institute of Accountants ing in the Third Annual Institute on committee on accounting procedure out­ Federal Taxation conducted by the State lined the functions of that committee College, in Providence, December 11th- and explained some of the problems 15th. Leading national tax authorities now before it for consideration. William spoke at this meeting which was at­ A. Paton, a member of the Institute’s tended by business executives through­ accounting procedure committee, dis­ out the state. Philadelphia Chapter of cussed accounting procedures pertaining Pennsylvania Institute and Temple to audit reports for 1944. Mississippi University were joint sponsors of a tax Society’s program at the State Col­ forum conducted at the university on lege on December 9th featured an address December 4th. Roy Blough, Director of on income-tax regulations by Robert Ash, Tax Research, Treasury Department, dis­ tax attorney, of Washington, D. C. This cussed prospects for tax simplification meeting, the first to be held by the society after the war. Philadelphia Control of the at the college, was attended by certified Controllers Institute and Philadelphia public accountants from all parts of Mis­ Chapter, NACA, cooperated. M innesota sissippi and from surrounding states. Society and other accounting organiza­ Minnesota Society invited successful tions in that state sponsored a two and candidates in the 1944 CPA examinations one-half-day course in problems involved to attend its meeting in St. Paul on De­ in preparing and filing personal income- cember 19th. At Georgia Society’s semi­ tax, corporate income-tax, and excess- annual meeting, in Atlanta on December profits-tax returns, for public accountants 2nd, a panel of nine tax experts reviewed and other tax practitioners, at the Uni­ important sections of the 1944 Revenue versity of Minnesota in December. Act. South Carolina Association held Indiana Association held a tax meeting its annual meeting, in Columbia, on De­ in Indianapolis on the afternoon of De­ cember 8th. cember 9th. Wisconsin Society con­ Members of Harrisburg Chapter of ducted its annual tax clinic on December Pennsylvania Institute presented a skit 14th, in Milwaukee. Randolph E. Paul, demonstrating procedure to be followed former general counsel of the Treasury by contractors and contracting agencies Department, addressed Maryland Asso­ in negotiating terminations, at a recent ciation on December 12th on “The meeting of a knit goods maufacturers’ Future of Corporate Taxes.” Members of group in Reading. A panel of tax experts the Bar Association of Baltimore, NACA, including members of Waco Chapter of and the National Association of Bank Texas Society and local representatives Auditors and Comptrollers were invited. of the Treasury Department conducted an A special conference for members of Ohio Society was held in Columbus, “Information Please” quiz at meetings of December 1st and 2nd. Various sessions Rotary, Kiwanis, and other luncheon were in charge of the society’s commit­ clubs early in December. Arrangements tees on cooperation with the Bar Associa­ for this program were made by the chap­ tion, CPA legislation, federal taxation, ter’s taxation committee. Boston Chap­ and state taxation. The theme of D istrict ter, NACA, and Boston Control of the The Certified Public Accountant 15

Controllers Institute joined Massachu­ State Society Officers setts Society in their combined annual program on December 13th. Maxwell E. S o u t h C a r o l in a —December 8, 1944 McDowell, head of the Tax Department President—Belton R. O’Neal, Greenville. of the Standard Oil Company (New Jer­ Vice-president — Oscar W. Schleeter, sey) discussed postwar tax plans. Mem­ Charleston. bers of the state bar association attended Secretary-Treasurer—William P. Harris, New Jersey Society’s meeting on Decem­ Greenville. ber 4th at which Howe P. Cochran, U t a h —December 15, 1944 widely known tax attorney, discussed cur­ President—Harold L. Child, Salt Lake rent tax problems. Pittsburgh Chapter City. of Pennsylvania Institute and the Vice-president—Lawrence S. Olsen, Salt Robert Morris Associates group in that Lake City. city conducted a joint meeting on Decem­ Secretary-Treaurer—David Stout, Salt ber 12th. Lake City. Arguments for and against restrictive accountancy legislation are presented by W y o m in g —December 9, 1944 Carl M. Esenoff and Lewis Lilly, respec­ President—Charles S. Chapin, Casper. tively, in articles appearing in the Janu­ Vice-president—Alford W. Cooper, Wor­ ary, 1945, issue of The California Certi­ land. fied Public Accountant, published by the Secretary-Treasurer—Gordon J. Raab, California Society. Casper.

Frank B. Austin of Jackson Heights, the Michigan State Board of Account­ N. Y., a partner in the firm of Patterson, ancy for eight years. In 1938 he was Teele and Dennis, died January 3rd at appointed chairman of the state board, the age of 61. Mr. Austin was a CPA of which position he held for three years. New York, and had been a member of the J. E. Hutchinson, Jr., of Dallas, American Institute of Accountants since Texas, died on December 18th at the age 1938. He served on the Institute’s com­ of 55. Mr. Hutchinson was senior part­ mittee on railroad accounting, 1941-1942, ner in the firm of Hutchinson, Bonner and on the committee on federal taxation, and Burleson. He was a CPA of Texas, 1942-1943. an honorary member of the Texas Society E. A. Bertholf of Des Moines, Iowa, of Certified Public Accountants, and had a partner in the firm of Boyer-Bertholf been a member of the American Institute Company, died on October 26th. Mr. of Accountants and predecessor organiza­ Bertholf was a CPA of Iowa and had tions since 1913. He served on the Insti­ been a member of the American Institute tute’s council from 1935 to 1940 and was of Accountants since 1928. a member of the committee on arbitration, F. J. Downie of Oklahoma City, Okla., 1944-1945. died November 11th. Mr. Downie was a John Kelly Raglan of Minneapolis, CPA of Oklahoma and Colorado and had Minn., died on October 8th. He was a been a member of the American Institute CPA of Minnesota and had been a mem­ of Accountants since 1937. ber of the American Institute of Account­ Laurence H. Fish of Benton Harbor, ants since 1922. Mich., died on December 24th. Mr. Fish George G. Yates of Temple, Texas, was a CPA of Michigan and had been a died November 16th. Mr. Yates was a member of the American Institute of Ac­ CPA of Texas and had been a member of countants since 1938. Mr. Fish served on the American Institute since 1934. 16 The Certified Public Accountant

Election of Members

C a l ifo r n ia Edmund A. Fleckenstein, New York Mark H. Bloodgood, Glendale Grantley O. Freeman, New York *Noble D. Hampton, Glendale *Leroy B. Griffin, New York Owen B. Lampman, Los Angeles *Raymond E. Hearne, New York *Ferdinand Simon, San Francisco *Louis J. Henry, New York *Paul G. Taylor, Glendale Robert L. Henry, New York Charles J. Kiely, New York D is t r ic t o f C o lu m b ia Herbert J. Kraus, Syracuse *David E. Leahy, Washington *Thurlow W. McWhinnie, Troy James T. Malone, Washington Robert T. Morrow, Rochester Raymond E. Noonan, New York F lorida Frederick W. Rapp, Rochester *John F . Ryan, Jacksonville Greydon A. Rhodes, New York *Robert E. Valdes, Tampa *Marcus J. Schaefer, New York I ll in o is *Arthur Scheib, Jr., New York Helen B. Cunningham, Chicago *George S. Shegog, New York †John W. Hannon, Chicago Morris Simon, Jamaica Allen C. Howard, Chicago *Albert B. Slacum, New York Aaron A. Rosenberg, Chicago *John L. Warren, New York Charles Stout, Chicago John P. Watts, New York *Edward P. Wilmsen, Chicago *Charles F. Werber, Jr., New York

I ow a N orth C a rolin a *Robert B. Hunter, Fort Dodge *C. F. Adamson, North Wilkesboro Kay J. Jennell, Charlotte K e n t u c k y *Robert Lloyd, Greensboro *Earle B. Fowler, Louisville *Guy R. Thomas, Louisville O hio Vernon J. Dobson, Toledo L o u is ia n a *Leonard B. Hurwitz, Mansfield †Laurent J. Roger, New Orleans *William S. Reaume, Cleveland *Peter Sherwood, Springfield M assachusetts Irwin G. Stirgwolt, Columbus John F. Moeller, Boston Harry J. Sweeny, Toledo *Arthur Wilkins, West Hanover *Charles W. Wilkins, Cincinnati M ic h ig a n O k l a h o m a Harry R. Bond, Jackson Oscar W. Brown, Tulsa Henry Fechheimer, Detroit Linn W. Hobbs, Detroit P ennsylvania *Lawrence C. Hobart, Detroit *Firmin G. Callan, Philadelphia *John H. Martin, Detroit *William E. Mattis, Philadelphia *Wilbert A. Walker, Pittsburgh M is s o u r i *Carl Lipoff, Kansas City T e n n e s s e e *John P. Miller, Kansas City *Robert M. Hasselle, Memphis James S. Rutherford, St. Louis T e x a s M o n t a n a Ben G. Kendall, Houston John M. Wallin, Billings Thomas C. King, Dallas †Howard G. Patterson, Fort Worth N e w J ersey Robert B. Thrift, San Antonio Charles A. Koenig, Rutherford *James A. Macpherson, Trenton V ir g in ia Adelbert F. Schefter, Newark *John W. Ballard, Jr., Norfolk Marvin R. Miller, Richmond N e w Y ork Bernard Ades, New York W a s h in g t o n Harry Adler, New York *John H. Bell, Spokane *Alfred D. Butterfield, New York Thomas L. Morgan, Seattle *James V. Collins, Syracuse W is c o n s in *John A. Fielder, New York *Louis A. Feurer, Milwaukee *Admitted as associates. †Edward W. Kuhlman, Milwaukee †Advanced to membership. Ernest H. Ramin, Milwaukee THE C e r tifie d Pu blic A c c o u n t a n t

A Bulletin of The American Institute of Accountants

V ol. 25 F ebruary, 1945 N o. 2

Federal Government Accounting

Following a conference in December, government as a whole is, of course, of at which George P. Ellis, chairman of interest to our committee as it relates to the Institute’s committee on govern­ efficient and economical government. mental accounting and the secretary of “It occurs to me that you might render the Institute were present with others in­ a real public service by forming an unoffi­ terested in the subject, Senator Harry F. cial committee, consisting of representa­ tives of the American Institute of Byrd of Virginia, chairman of the Joint Accountants and representatives of the Committee on Reduction of Nonessential principal government bodies now dealing Federal Expenditures, sent to the chair­ with these problems, who might pool their man of the Institute’s committee the fol­ knowledge and experience to formulate lowing letter: recommendations which can be duly con­ sidered by our committee and other Con­ “You have offered the cooperation of gressional committees. I personally would the American Institute of Accountants’ welcome a report from such a group, committee on governmental accounting whose membership brought to bear the in consideration of the problems of ac­ various viewpoints of those immediately counting control, auditing, and financial concerned with the subject.” reporting of federal government organi­ zations. I am informed that reports of In accordance with this request, invita­ your committees and papers read at tions were extended to a number of ac­ meetings of your group have contained counting officials of government agencies specific criticisms and suggestions on and corporations, and to members of the present federal government accounting Institute’s subcommittee on federal gov­ procedures. ernment accounting, to join an unofficial “The Joint Congressional Committee on group which might consider the problem Reduction of Nonessential Federal Ex­ penditures, of which I am chairman, is outlined by Senator Byrd. All those now studying the problem of developing who received these invitations accepted adequate control, audit, and financial re­ them. Following are the members of the porting mechanisms for the federal gov­ group: ernment corporations, which will enable George P. Ellis, Eric L. Kohler, Lloyd Congress to be fully informed without Morey, and Leland G. Sutherland, mem­ impeding the legitimate activities of these bers of the Institute’s committee on gov­ corporations. The broader subject of ac­ ernmental accounting; E. F. Bartelt, counting and auditing for the federal Commissioner of Accounts, United States

PUBLISHED BY AMERICAN INSTITUTE PUBLISHING CO., INC. 13 East 41st Street, New York 17, N. Y. 2 The Certified Public Accountant

Treasury Department; R. H. Slaughter, Administration; Henry P. Seidemann, Assistant Chief of Investigations, Gen­ The Brookings Institution. eral Accounting Office; J. Weldon Jones, The first meeting of this group was Assistant Director in Charge of the Fiscal held February 1st at Washington. There Division, Bureau of the Budget; W. R. Quigley, Assistant Director, Office of an agenda was outlined and studies were Budget and Finance, Department of planned which it is hoped will lead to Agriculture; Nathaniel Royall, Chief constructive recommendations useful to Auditor, Reconstruction Finance Corpor­ the Congressional Committee on Reduc­ ation; John B. Payne, Controller, U. S. tion of Nonessential Federal Expendi­ Commercial Company, Foreign Economic tures and others interested.

Significance of Pronouncements on Accounting Procedure

At the first meeting of the newly ap­ “In general, I think it may be said pointed committee on accounting proce­ that the bulletins are accepted as dure of the American Institute of Ac­ authoritative by the various segments of countants for the current fiscal year, held our economic structure which come in at New York on December 14th, chairman contact with accounting principles. Busi­ ness has accepted them, albeit somewhat George D. Bailey appraised the position grudgingly in certain quarters and in of this committee and indicated its fu­ certain cases. The legal profession ap­ ture opportunities. His remarks are re­ pears to be glad to have an authorita­ printed below in the belief that they will tive reference. Regulatory bodies at least be of interest to Institute members: are not disregarding them, though we can hardly say more than that the pro­ “Six years have given the committee nouncements have influenced those bodies. a position that only the most optimistic Whether we are attaining the ultimate could have expected. The preceding com­ goal of having them accepted by the mittees by their care and through the courts as final, it is too early to appraise. guidance of the chairmen have bequeathed “The committee has undertaken to to us as a new committee a valuable guard the integrity of accounting prin­ heritage. It is up to us and future mem­ ciples. That is a broad statement, but it bers whether we develop that heritage to an even stronger position for the profes­ is what it did last year when it filed a sion. brief with the Supreme Court. Perhaps it is better to say that the committee has “I am not going to review the history undertaken to raise its voice in protest of the past six years in the development —if the point in question is important and of principles. But I do want to point out the body one which carries great weight that the result of the past six years has —when it sees responsible bodies pur­ been to give more and more to account­ porting to state as an accepted accounting ants the prime authority on accounting principle what is not believed to be so principles rather than to the law, the by the committee. How to develop this is courts, and the lawyers. one of the problems of the committee. "The committee as a committee has no “It seems to me our usefulness for the authority. Its pronouncements are not future will depend on the recognition and laws, nor are they regulations of the application of several basic points. Institute. The pronouncements of the committee have only the authority that (1) We must be objective—as completely comes from the soundness of its reason­ objective as it is possible to be. We ing, and the prestige of its members. must be controlled neither by the Nevertheless it is a brave man in the fear of dislike from corporations accounting profession who is willing to nor from governmental bodies. I take on the task of justifying a disregard think we have demonstrated in the of the releases. The profession at least past six years that we can be as has accepted these pronouncements. objective as either of these groups— The Certified Public Accountant 3

perhaps, in view of the size and the mean that as society changes we representative character of our com­ must consider the changed require­ mittee, even more so. As that point ments of accounting. is more generally realized, our (4) And last, we must keep before us prestige should increase. the responsibility for the develop­ (2) We must move forward. We must ment of accounting as such—ac­ lead in the development of principles counting as an instrument in itself, and practices. This means that we not to be controlled by laws or by must constantly be searching for and income tax. expressing preferences between alternative practices, although we “Those, if you will, are my own con­ may wish to recognize the propriety cepts of the place of this committee. They of each. This means, too, that we are, I think, merely an evolution of the must strike out on new lines, but work of the committee and its chairmen we must be careful to prepare the in the past. The council of the Institute way so that we can carry the pro­ has made it possible for us to have ade­ fession with us. quate staff support. We have, as in the (3) We must bear in mind the aim of past, a research director of great ability the committee expressed in Bulletin and talents, but we for the first time No. 1, that accounting, financial will have one who devotes his full time statements, must be useful to our to research work for us and other activ­ society. It seems to me this must ities of the Institute.”

Secretary’s Notes

I n s t it u t e M e e t in g s ready if the meeting can be held. Final The ban on conventions by the recently determination as to whether or not the organized War Committee on Conven­ meeting must be canceled will be made tions will probably result in cancellation in the summer. of the spring meeting of council of the A release of the War Committee on American Institute of Accountants, Conventions indicates that local meetings which do not require the use of trans­ which was scheduled to be held at Hot portation facilities or hotel accommoda­ Springs, Virginia, April 30th - May 2nd. tions by those in attendance are not At the recommendation of the executive intended to be prohibited by the conven­ committee the president has submitted for mail vote of council the question whether tion ban. Plans for addresses by officers of the Institute at meetings of state the meeting should be canceled. It ap­ society chapters in principal cities this peared that it would be impossible to spring are therefore being continued as confine the attendance to fifty (which is a wartime substitute for regional con­ the maximum unless special permission ferences. is obtained) without impairing much of the value of the meeting, and that essen­ F o r e ig n P r a c t ic e tial business could be transacted by mail. A second conference of representatives Plans for the annual meeting of the of the accounting profession and the Institute scheduled to be held in Chicago State Department was held January 11, in October, 1945, will be held in abeyance 1944, at Washington, to discuss legisla­ until it can be foreseen whether or not tion abroad which might impede the the convention ban will remain in effect practice of accounting in foreign coun­ through next fall. The committee on tries by certified public accountants of technical sessions has begun the work the United States. The Institute was of building a program, which will be officially represented by the secretary. 4 The Certified Public Accountant

It is understood that diplomatic repre­ essential activities, as before, with refer­ sentatives of the United States have dis­ ence to Item 35 of the list of essential cussed with officials of the Cuban Govern­ activities, entitled “Technical, Scientific ment the possibility of clarifying the and Management Services.” position of American certified public ac­ At the request of the National Roster, countants by means of regulations to be Mr. Lindquist and Thomas W. Leland, issued under the new Cuban accountancy educational director of the Institute, re­ law. As this item is written, announce­ cently submitted suggestions for a revised ment of the regulations has not yet been “description of the profession of account­ received. ing” and a revised handbook describing In January it was reported that a bill specialized accounting fields. had been enacted in Mexico to regulate all professions, including accountancy. M o d el C o r p o r a t io n L a w The text of the bill is not yet available, A model corporation law, drafted by a and the extent to which it may affect committee of the American Bar Associa­ certified public accountants of the United tion, whose chairman has indicated that States is unknown. State Department he would welcome the Institute’s sugges­ representatives are investigating. tions, is now being examined by a com­ At both the conferences with State mittee which may make recommendations Department officials, emphasis was laid on accounting terminology and other mat­ on the importance of reciprocity in recog­ ters related to accounting. nition of accredited accountants of coun­ tries which regulate the profession. It T a x S implification has been suggested that state societies At a dinner meeting at Washington in which are currently considering changes January, representatives of the Institute in accountancy laws of their states make discussed with several members of the provision whereby accredited accountants House Ways and Means Committee the of foreign countries be permitted to prac­ possibility of creation of a nonpartisan tice under such laws. commission of experts to undertake com­ plete revision of the federal tax system, M a n p o w e r as recommended by the Institute and the Late in January the Institute sent to American Bar Association last year. Sev­ all members and associates copies of a eral possible avenues of approach to the Selective Service System letter to local problem were explored, and faults of the boards, dated January 15, 1945, with present tax system were discussed. All transmittal memo No. 163 and a list of present agreed that a sound tax policy essential activities, as well as a copy of should be developed before the end of Local Board Memorandum No. 115-I as the war. amended January 4, 1945. The Institute was represented by John A. Lindquist, chairman of the Samuel J. Broad, president, Victor H. Institute’s committee on manpower, and Stempf, past president, Harry E. Howell, the secretary met in January with the and Thomas J. Green, members of the Director and the Executive Officer of committee on federal taxation, and the the National Roster of Scientific and secretary. Specialized Personnel, a part of the War Manpower Commission, to discuss recent A c c o u n t a n t s i n A r m e d F o r ce s changes in Selective Service policies and Approximately 2500 officers and en­ plans for rehabilitation of veterans. listed men in the Army of the United The Institute has received assurance States, who in civilian life were prac­ that accounting services to war production ticing public accounting, many of them are included in the index to the list of certified public accountants, are estimated The Certified Public Accountant 5

now to be engaged in accounting work in committee on membership the names of the Army. Quotas for transfer to con­ 538 certified public accountants who are tract-termination staffs in the several members of their state societies but not arms and services are reported to have members of the Institute. Reports are been filled for the time being. being received from the committee mem­ bers which will enable the staff to build F e d e r a l L e g is l a t io n up a master file of information related With the assistance of counsel for the to each of these accountants. Ten appli­ Institute, appropriate committees and the cations have already been received from staff are following the progress of a the group as a direct result of the mem­ number of bills introduced in the new bership committee’s work: 2 from Cin­ Congress on such subjects as income cinnati, 1 each from Cleveland, Louisville, taxation, social security, manpower, ad­ Detroit, Great Falls, Mont., Augusta, Ga., ministrative agencies, national certifica­ Wichita, Kans., Perth Amboy, N. J., and tion of corporations, amendments to the Decatur, Ill. Securities Act, audit of government agen­ A total of 181 new members and asso­ cies and corporations, organization of ciates were admitted to the Institute in Congress, and similar matters, some as­ January, and 6 associates were advanced pects of which relate to accounting and to membership. This is the largest num­ auditing. ber of admissions since January, 1944. Total number of members and associates, C oordination o f S t a t e a n d as this bulletin goes to press, is 8455. N a t i o n a l A c t iv i t ie s

C. F. Milledge, Texas, chairman of the P ublications Advisory Council of State Society Presi­ dents, has appointed a committee of state A total of 4262 copies of the proceed­ society presidents, of which William H. ings of the 1944 annual meeting of the Goldberg of Colorado is chairman, to Institute, entitled Termination and Taxes, prepare a detailed plan for coordination have been sold at one dollar each, in of activities of state and national organi­ addition to the 8566 copies distributed zations, in accordance with recommenda­ without charge to members and others. The Accounting Review for January, tions of an Institute committee submitted 1945, contains a paper by the secretary to the Advisory Council in St. Louis in October. A number of state societies of the Institute entitled “Development of Aptitude Tests for Accountants,” have approved the plan in principle since which was presented at the annual meet­ that time and have offered to contribute toward its financing. ing of the American Accounting Asso­ ciation last fall. C o m m it t e e s to A id V e t e r a n s J. L. C. Presidents of four additional state so­ cieties have appointed special commit­ In the Armed Forces tees to render service to accountants re­ Supplementing earlier announcements turning from the armed forces, bringing of sons and daughters of Institute mem­ the total to ten. bers serving with the Armed Forces of the United States, i t ; has just been M e m b e r s h i p learned that Audrey E. Broad, daughter The committee on membership is now of Samuel J. Broad, president of the actively engaged in a plan to inform non­ Institute, is Assistant Field Director, members of the benefits to be derived American Red Cross, 237th General from affiliation with the Institute. Since Hospital (overseas). Mr. Broad’s son, the middle of January the staff of the Edward B. Broad, is a Second Lieutenant Institute has submitted to members of the in the United States Army. 6 The Certified Public Accountant

facilitates its filing and use with the re­ Research Department lated bulletin.

M e e t i n g o n A c c o u n t in g P r o c e d u r e

P r o po se d B u l l e t i n The Philadelphia Chapter of the Penn­ Of the various subjects under consid­ sylvania Institute of Certified Public Ac­ eration by the accounting and auditing countants will coöperate with the Insti­ committees, three have been developed tute by holding a meeting on accounting to a tentative-draft stage. The proposed procedure, April 23rd, the program for bulletin on accounting for terminated war which will be arranged by George D. contracts has been redrafted and commit­ Bailey, chairman of the American Insti­ tee members are currently considering tute’s committee on accounting procedure, opinions on the presentation of subcon­ and the director of research. It is tractors’ claims. A subcommittee is study­ expected that the organization and devel­ ing a draft of a proposed statement re­ opment of the committee, the recently lating to the auditor’s responsibility for issued research bulletins, and the subjects earnings summaries, historical financial presently under consideration, will be information, etc, presented in registration among the matters to be discussed. The statements and prospectuses. Alternative program may develop a pattern that will proposed bulletins on accounting for op­ serve as a guide for similar meetings in tions granted officers and employees are other cities. being considered by the subcommittee on I n c o m e T a x a s E x p e n s e stock options. As a footnote to the current discus­

A u d it o r ’s P r o b l e m s sions relative to the nature of the federal income tax on corporations, attention is A committee of the New York State directed to the conclusions of the com­ Society of Certified Public Accountants mittee on terminology expressed in its has been studying the auditor’s problems 1941 midyear report (Accounting Re­ arising under the Institute’s Statements search Bulletin No. 9 ): on Auditing Procedure, No. 21, “W ar­ time Government Regulations.” Repre­ “Income is also used in a narrower sentatives of the society’s committee and sense to mean the share of a gain that accrues to a particular person or group the Institute’s committee on auditing of persons, natural or legal. The income procedure have met to discuss those mat­ of an enterprise may be divisible among ters and to consider areas for further many interests in a certain order of prior­ investigation. ity. The portion which remains after deducting prior charges is the net income I n c o m e -T a x B u l l e t i n from the standpoint of the interest or The committee on accounting prin­ interests then remaining. As used in cor­ ciples and practice of the New Jersey poration accounting, therefore, net income Society of Certified Public Accountants means the portion of gross income re­ maining after deducting all claims (such has released a statement on Accounting as bond interest) ranking ahead of that Research Bulletin No. 23, “Accounting of the corporation as a legal person.” for Income Taxes,” which will be re­ (p. 72.) printed in the March issue of The Journal of Accountancy. Addressed to the mem­ S t o c k O p t io n s bers of the New Jersey Society, the state­ In the discussion of problems relating ment presents the Summary Statement to the accounting for stock - option of Bulletin No. 23 and an explanatory arrangements, it has been suggested that analysis and interpretation of the bulletin confusion on the subject has resulted material. The format of the statement from failure to distinguish between the The Certified Public Accountant 7

agreements made with officers and em­ These suggestions are being reviewed ployees to issue options and the options by the tax committee together with the themselves. The first is an option agree­ more general problem of expediting re­ ment or contract while the second is a funds and carry-back credits. right to acquire corporate shares received pursuant to the contract. The consensus S p e c i f i c T a x E x e m p t io n of opinion with respect to the time of The proposal that the specific exemp­ recording the transaction and the meas­ tion for excess-profits tax purposes should urement of the monetary value is that be increased from $10,000 to $25,000 they should be determined by the time upon cessation of the war with Germany the option right becomes effective and appears to be gaining favor as a means not by the time the contract is entered of early general corporate tax relief into, although these may, in some in­ and particularly as an aid to the stances, be simultaneous. establishment and growth of small and

C a r m a n G . B l o u g h , new companies during the transition Director of Research. period. This is in accordance with recom­ mendation number one of the tax com­ mittee’s “Postwar Taxation” report which Tax Department proposes, with the first important cut­ back in government war expenditures, probably following the cessation of active I m m e d ia t e N egotiability o f E x c e s s European hostilities, an increase in ex­ P r o f it s T a x P o s t w a r R e f u n d s emption to $20,000 or $25,000 coupled In order to give aid to many corpora­ with a reduction in excess - profits tax tions which will be handicapped by lack rates to a maximum of 60 per cent with­ of capital to carry out reconversion plans, out postwar refund. The tax committee a proposal that excess-profits tax refunds also recommended that, as soon as pos­ should be made immediately negotiable sible after complete cessation of active has been urged upon Congressional and hostilities, the excess-profits tax should Treasury officials. Under the present law, be completely repealed. the bonds are nonnegotiable and cannot T a x R e f o r m S u g g e s t io n s be transferred by exchange, sale, assign­ ment, etc., until the date of cessation of The tax committee continues to serve hostilities in the present war. The new the function of carefully reviewing tax suggestions, which take varying forms, suggestions of general application from would allow holders of these bonds to Institute members regarding various tech­ discount them or use the bonds as col­ nical inequities and recommendations for lateral for loans currently, or, as some improving the tax law, and welcomes such suggestions have it, make them available communications. However, answering for payment of taxes prior to present specific individual tax questions of nar­ redemption dates. One of the variations row application is not within the scope of this proposal was made by War of the tax committee’s functions.

Mobilization Director, James F. Byrnes, T a x C h a i r m a n S p e a k s in a report to Congress and the Presi­ dent January 2, 1945. Mr. Byrnes sug­ Maurice Austin, chairman of the com­ gested immediate payments, upon the ter­ mittee on federal taxation, addressed the mination of the European war, of a American Management Association on portion of the postwar excess-profits tax January 31st. refund and a corresponding reduction in R e b e c c a N e w m a n G o l u b , the compulsory-savings (postwar refund) Technical Assistant to the provision in the excess-profits tax. Committee on Federal Taxation. 8 The Certified Public Accountant

professional accountants upon their dis­ Educational Department charge from the Armed Forces. Here are a few quotations from these letters: “It is heartening to know that plans M a y , 1945, CPA E x a m i n a t i o n are being formulated which will lessen Subcommittees of the board of exam­ the effects of interrupted progress on the part of of the individual participant and iners have approved questions and an­ simultaneously benefit the profession as a swers for the May, 1945, examinations whole. and copy has been sent to the printer. “The subjects listed on the tentative outline are the type on which I feel the A c c o u n t in g E d u c a t io n need of some retraining. . . . Finally, I Dean Henry T. Chamberlain of Loyola expect to avail myself of the opportunity University has been appointed by Harvey to participate in such a refresher course.” G. Meyer, President of the American Accounting Association, as chairman of “I would very definitely be interested the Association’s committee to work with in a refresher course similar to the one the committee on education of the Amer­ outlined.” ican Institute of Accountants. Plans “The outline of text material . . . have been made for a meeting between which you submitted with your letter is Mr. Chamberlain and John W. Queenan, extremely complete and covers all sub­ chairman of the Institute’s committee. It jects which an accountant who has been is the purpose of this meeting to agree divorced from the profession for two or upon the agenda for a joint conference three years would want to review upon of the two committees and the appoint­ return.” ment of subcommittees to undertake pre­ The letters emphasize the importance liminary studies preparatory to the con­ of making the refresher material avail­ ference. able on a home-study basis and one cor­ respondent suggests that steps should be R e f r e s h e r C o u r s e i n A c c o u n t a n c y taken to make it available for individuals Considerable progress has been made and study groups during the period that in carrying out plans for the refresher men are still in service. He indicates course in accountancy for war veterans that there are spare moments which can and former public accountants who have be utilized to put him a few steps ahead been employed as civilians with various in his retraining program. Another cor­ war agencies of the government. In respondent makes the request that the January the authors of the tax chapters case method of study be used wherever met for the purpose of deciding on the possible. These constructive suggestions content and method of presentation of will receive consideration. the tax subjects. Copy for the various chapters is now coming in from the au­ S t a t e L e g is l a t io n thors and those who have not yet sent in During January the educational direc­ manuscripts have been requested to do tor made trips to Washington, D. C., for their best to meet the date set for com­ a conference with Spencer Gordon, Insti­ pletion. tute counsel, and to the Southwest for Outlines of the proposed refresher meetings with T. Dwight Williams of course were sent by Raymond E. North, Oklahoma City, chairman of the Insti­ chairman of the committee on refresher tute’s committee on state legislation, and courses, to a few servicemen for re­ with the legislative committee of the view and comment. Replies from these Texas Society of Certified Public Ac­ men expressed the opinion that the course countants. The purpose of these trips will answer one of the basic needs of was to complete the revision of the Form The Certified Public Accountant 9

of Regulatory Public Accountancy Bill. A revised draft of the bill was recently Public Information Department mailed to members of the committee on state legislation for what it is hoped will T e r m i n a t i o n C o n f e r e n c e s be final approval. Planning of war-contract-termination A number of states are considering the conferences of state societies continued enactment of regulatory legislation. in January. Representatives of the Army Drafts of regulatory bills have been and Navy were consulted as to the pos­ prepared for submission to the legisla­ sibility of conferences in February and tures of New York, Alabama, and Texas. in April. Attendance figures for confer­ Regulatory legislation is being considered ences held in January, in Cleveland and in the states of Ohio and Connecticut, Milwaukee, were, respectively, 304 and but the latest reports from these states 180. Advance and follow-up news mate­ indicate that no bill will be presented in rial was prepared in connection with the the current legislative sessions. A major­ war-contract-termination conferences of ity of the members of the Ohio Society Cleveland Chapter of the Ohio Society, of Certified Public Accountants have and of the Milwaukee Chapter of the indicated in a recent mail canvass that Wisconsin Society of Certified Public they do not wish to sponsor a bill at this Accountants. time. As reported elsewhere in this bul­ Reproductions of newspaper publicity letin, a regulatory bill has already been relating to war-contract-termination con­ introduced in Minnesota with the sup­ ferences, together with a summary of the port of the Minnesota Society of Certified results of the conference series, were sent Public Accountants. A recent polling to appropriate committees, to members of of the members of the California Society the council of the Institute, and to presi­ on the question of regulatory account­ dents of those state societies of certified ancy legislation resulted in a vote of 296 public accountants which had held or to 291 in favor of regulatory legislation. arranged to hold conferences. A bill for California is being drafted for use at such time as the Society might S p e a k e r s B u r e a u decide to submit a bill. Several requests were received from T h o m a s W. L e l a n d , state societies and other accountancy Educational Director. groups, for help in securing speakers for meetings. The president of the Amer­ New State Board Personnel ican Institute will address the Maryland Association of Certified Public Account­ C o n n e c t ic u t ants on February 27th. A member of James W. Hickey of Hartford has the Institute had accepted an invitation been appointed a member of the State to address the annual meeting of the Board of Accountancy, succeeding American Institute of Decorators, but Charles F. Coates, also of Hartford, this meeting was canceled owing to war who recently resigned after completing conditions. A representative of the 22 years and nine months of service American Institute is scheduled to ad­ on the board. dress an insurance conference of the American Management Association in N o r t h C a r o l in a March. George E. Perrin, Greensboro, president. Harry W. Bundy, Elizabeth City, vice- P u b l ic it y president. Assistance is being extended to state W. M. Russ, Raleigh, secretary-treasurer. societies of certified public accountants W. Bowen Henderson, Asheville. in arranging for public announcement 10 The Certified Public Accountant of appointment by their presidents of State Society of Certified Public Ac­ committees to cooperate in the program countants. The committee on federal, to aid veterans proposed by the American taxation received reproductions of news­ Institute. Cooperation was given the paper references to the work of that American Management Association in the committee. preparation of news material relating to the appearance of the chairman of the D i n n e r fo r NAM P r e s id e n t Institute’s committee on federal taxa­ That part of the public-information tion, at a finance conference of the asso­ program relating to cooperation with out­ ciation. side organizations led to a most interest­ Arrangements were made for a repre­ ing development in January. This was sentative of the New York Journal of the initiating of plans by which the Commerce to interview the Institute’s American Institute and the Massachusetts director of research on the subject of Society of Certified Public Accountants treatment of goodwill items in the bal­ will be joint hosts at a public dinner in ance-sheets of industrial companies. This Boston in April to Ira Mosher, newly interview resulted in the publication of elected president of the National Asso­ the article in which the committee on ciation of Manufacturers, who is a mem­ accounting procedure of the American ber of both the Institute and the Massa­ Institute was quoted. chusetts Society. Mr. Mosher has Advance news material was released accepted an invitation to speak at this relating to the appearance of the secre­ dinner. At a luncheon in January he tary of the Institute as a speaker before met the presidents of the Institute and the New Hampshire Chapter of the of the Massachusetts Society, and other National Association of Cost Account­ representatives of both organizations. ants. Newspapers in Boston and Indian­ apolis were provided with announcements F r a n k A. G a l e , Assistant Secretary. of the assignments of Massachusetts and Indiana authors to write chapters for the American Institute refresher course for Research Project in veterans. Information relating to the natural business year, an article in the Selection of Personnel December issue of The Journal of Ac­ Warren W. Nissley, chairman of the countancy by the chairman of the Insti­ committee on selection of personnel, has tute’s committee on social security, and received from Dr. Ben D. Wood, direc­ recommendations of the committee on tor of the research project under supervi­ federal taxation concerning postwar sion of the committee, the first of a series taxation and revisions of the Internal of quarterly reports of progress of the Revenue Code were distributed to inter­ project. Notwithstanding the handicaps ested organizations and individuals. arising under the manpower shortage, considerable work is reported in research N a t u r a l B u s i n e s s Y e a r on measurement of interests of public The committee on natural business year accountants, and in the construction of has received a memorandum outlining in tests of general mental ability and detail the staff’s procedure in bringing achievement in the principles and prac­ about removal from a bill in Congress tices of accountancy. Dr. Arthur E. of a provision requiring use of the calen­ Traxler, assistant director of the project, dar year by new small corporations, and is in immediate charge of the activity on also extracts from an address by Nor­ the appraisal of interests. Dr. Kenneth man D. Cann, Deputy Commissioner of W. Vaughn has primary responsibility Internal Revenue, before the New York for the construction of tests. The Certified Public Accountant 11

A considerable part of the report re­ graphical distribution. The study to date lates to the experiment with the Strong indicates that there may not be a marked Vocational Interest Blank for Men. The need for the construction of a new scale objectives of the experiment are: (1) for junior accountants, but that one might to determine the typical vocational-inter­ be helpful for senior accountants. The est profiles for various grades of public question of the construction of additional accountants; (2) to study the value of scales has been taken up with Dr. Strong. the Strong blank for possible use in the The construction of examinations selection of accountancy personnel; and (other than interest tests) which will (3) to obtain data which might be used assist in the guidance, classification, and in the revision of the Strong scale for placement of recruits for the accounting CPA’s, if such a revision seems advisable. profession may be classified in two gen­ Interest blanks were filled out by 1868 eral categories: (1) achievement exam­ public accountants, but the significant inations, i.e., tests of preparation in conclusions reached to date relate to a specific subjects; and (2) psychological study of the scores of 827 individuals. tests, i.e., tests of intelligence, interest, This group includes 200 partners, 200 personality, etc. managers, 113 senior accountants, 114 Four achievement tests are now in the semi-senior accountants, and 200 junior process of construction, as follows: accountants. The interests of the group (1) Principles of accounting and audit­ as a whole are in closest agreement with those of accountants and CPA’s as as­ ing; certained in the previous research by Dr. (2) Business mathematics; Strong. (3) Business vocabulary; The report presents an analysis of the (4) Comprehension of business mate­ interests of each of the five levels of rials. public accountants making up the entire Dr. Vaughn believes that these achieve­ group. Median scores of the partners ment tests will be of great value to ac­ and managers tend to be closely similar, counting firms in the selection of trained and those of the semi-seniors and juniors and semi-trained accountants immediately agree well, while those of the seniors following the discharge of service per­ tend to occupy a middle position. Part­ sonnel. They are designed to indicate ners stand highest on the “CPA” scale; whether individuals are sufficiently and managers and seniors in second and trained to undertake work at a certain third positions, respectively. Juniors and level. The intelligence tests will be de­ semi-seniors are at identical points con­ signed to assist in the selection and guid­ siderably lower in the scale. There is ance of students toward or away from a complete reversal of these relation­ the accounting curriculum, to place and ships on the “accountant” scale. classify applicants for employment, and The CPA scale for the Strong blank to identify individuals of high potential was constructed some fifteen years ago value to an employing firm. The report on the basis of data obtained from 778 states that work in the development of CPA’s certified in the states of New tests has been delayed by the inability York and California. Dr. Wood is faced to make satisfactory arrangements for with the problem of deciding whether the employment of one or more expert Strong's original data are now satisfactory accountants to work as subject specialists or whether the CPA scale should be im­ with Dr. Vaughn. proved by restandardization on the basis Dr. Wood has authorized the an­ of the data collected in this more recent nouncement that Strong interest blanks study of the interests of a larger number would continue to be scored for Institute of accountants covering a wider geo­ members and their staffs, and that reports 12 The Certified Public Accountant would be made to such firms on the inter­ Board of Registered Accountants comprised est scores of their employees. Requests of three members appointed by the gover­ nor, and to prescribe qualifications for ad­ for the blanks should be mailed direct to mission to practice and examinations— the Director of Research Project in Selec­ referred to governmental efficiency and tion of Personnel 437 West 59th Street, economy committee; S. 936, broadens busi­ New York 19, New York. ness and professions code to include all accountants instead of only certified — re­ ferred to business and professions commit­ State Accountancy Legislation tee ; S. 995, relating to educational require­ ments for admission to examination f or R eport on B il l s I ntroduced certified public accountant—referred to busi­ California: A. 209, to provide for waiver ness and professions committee. of state examination for accountants with Colorado: H. 21, relating to the protec­ ten years of experience within the state— tion and conservation of public funds re­ referred to governmental efficiency and quiring periodical audits and establishment economy committee; A. 228, “Tax Coun­ of accounting procedure—referred to coun­ selors’ Act,” to provide for the creation of ties committee. a Tax Counselors’ Commission, and the licensing and regulation of tax counselors, Minnesota: H. 57, to regulate the prac­ and for the issuance of “Certificate of Quali­ tice of accountancy in the state, and to bring fication” to anyone satisfactorily completing all public accountants practicing in Min­ a prescribed examination—referred to gov­ nesota under the control of a State Public ernmental efficiency and economy committee Accounting Board—referred to civil ad­ (the California Society is opposing this ministration committee. This legislation legislation) ; A. 685, to amend the business has the support of the Minnesota Society of. and professions code relating to account­ Certified Public Accountants. ancy ; to provide for registration and ex­ New York: A. 67, S. 60, permits the amination of public accountants by a State practice of medicine, dentistry, podiatry, and as certified public accountant by persons convicted of felony if they have received certificate of good conduct from parole board CPA Examination Schedule —referred to education committee. New York State Society is not opposed to this State accounting boards adopting legislation. the uniform examinations prepared by the American Institute of Ac­ New Mexico: A new section, 20-112(e), countants will hold the regular spring added to the Certified Public Accountant law examinations on May 16, 17, and 18, • to provide for privileged communications. 1945, according to the following schedule: A Course for Lawyers and Accountants Wednesday, May 16th: 1:30 to 6:00 P.M.—Accounting Practice, A lecture course on “Current Prob­ Part I. lems in Accounting for Lawyers" will be conducted by the Practising Law In­ Thursday, May 17th: 9:00 A.M. to stitute, with the cooperation of the 12:30 P.M.—Theory of Accounts. American Institute of Accountants and The New York State Society of Certi­ Thursday, May 17th: 1:30 to fied Public Accountants, at the New 6 :00 P.M.—Accounting Practice, York County Lawyers’ Association Part II. Building, 14 Vesey Street, New York, on Friday, May 18th: 9:00 A.M. to 12 Thursday evenings between March 12:30 P.M.—Commercial Law. 1st and June 14th from 7 :30 to 9 :30. The tuition fee is $20. All accountants Friday, May 18th: 1:30 to 5:00 and lawyers are eligible to attend. Fur­ P.M.—Auditing. ther information may be secured from the Practising Law Institute. The Certified Public Accountant 13

SEC Accounting Series Releases SEC in the instructions to Form X-17A-5 as minimum audit requirements The Securities and Exchange Commis­ for the proper substantiation of a state­ sion recently issued two additional re­ ment of the financial condition of a leases in its accounting series. Release broker-dealer. Proceedings were discon­ No. 50, issued on January 20th, an­ tinued, the release indicates, upon the nounces an opinion prepared by the filing of a stipulation by the accountant Chief Accountant of the Commission in in which he admitted familiarity with reply to an inquiry concerning the pro­ the Commission’s rule X-17A-5 and priety of writing down goodwill by means Form X-17A-5, acknowledged failure to of charges to capital surplus, under speci­ observe minimum audit requirements fied circumstances. prescribed by that form, and agreed to Accounting series release No. 51, is­ refrain from future practice before the sued on January 26th, reports private Commission. proceedings involving an unnamed cer­ The full text of both recent releases tified public accountant whose audit, it will be reprinted in the March issue of is alleged, omitted a number of proce­ The Journal of Accountancy, under “Offi­ dures and safeguards prescribed by the cial Decisions and Releases.”

Eugene M. Berger of Los Angeles, firm of Hennegin, Croft & Co. Mr. Cal., died August 22, 1944, the Institute Hennegin, a former vice-president of the has just learned. Mr. Berger was a part­ Institute, served on the council of the ner in the firm of Eugene M. Berger & Institute from 1926-1932, and had been Co. He was a CPA of California and a member of several Institute commit­ had been a member of the American In­ tees. He became a member of the stitute of Accountants since 1924. American Institute of Accountants in 1916. William E. Brunck of St. Louis, Missouri, resident partner of the firm Frederick A. Linden of San Fran­ of Ernst & Ernst, died on January 30th cisco, Cal., a partner of the firm of at the age of 51 years. Mr. Brunck was Ernst & Ernst, died January 16th. Mr. a CPA of Missouri, Ohio, Iowa, and Linden was a CPA of Ohio, California, Tennessee and had been a member of Washington, and the District of Colum­ the American Institute of Accountants bia, and had been a member of the since 1939. Mr. Brunck served as American Institute of Accountants since treasurer of the Missouri State Board of 1942. Accountancy for a number of years. Edouard E. Noreen of Minneapolis, Myron M. Goldman of New Orleans, Minn., died on January 3rd. Mr. Noreen La., died on November 25th. Mr. Gold­ was a practicing accountant under his man was a charter member of the Society own name. He was a CPA of Minnesota of Louisiana Certified Public Account­ and had been a member of the American ants and had been a member of the Institute of Accountants since 1942. American Institute of Accountants and predecessor organizations since 1911. He Charles Cullen Roberts of West was a CPA of Louisiana, Texas, and Hartford, Conn., died on November 4th. Mississippi. Mr. Roberts had been a member of the American Institute of Accountants and Harry W. Hennegin of Little Rock, predecessor organizations since 1904. He Ark., died on November 17th. He was served on the committee on education a CPA of Arkansas and a partner in the from 1922-1923. 14 The Certified Public Accountant

Election of Members I n d ia n a *Francis A. Hehn, Collegeville Alabama *Armando J. Porta, South Bend Whitwell Newton Middleton, Mobile *William J. Smith, Evansville Arizona I ow a R. Freer Haddox, Phoenix John Selby Oden, Des Moines †Harold A. Schroer, Sioux City Arkansas *Walter L. Hudlow, Hot Springs K a n s a s California *Fred L. Wiesner, Hays Clement L. Bittner, San Francisco K e n t u c k y *Frank H. Kartozian, San Francisco *Harold Wayne Glore, Louisville *Howard Scott Noble, Los Angeles *Herbert O. Hincks, Louisville Clyde Downing Powell, San Diego *Oliver O. Howard, Louisville *Joseph Myron Ruggiero, San Francisco *F. Edward MacDonald, Louisville Samuel M. Shulman, Los Angeles Ralph H. Schuette, Paducah *George J. Weiser, Oakland *Joseph A. Steltenpohl, Louisville †Henry J. Wintrode, Los Angeles L o u is ia n a C olorado *Gerald L . Andrus, New Orleans Ray Laurence Merrill, Denver *Dwight M. Brown, Shreveport C o n n e c t ic u t *Rufus M. Carimi, New Orleans Morris Fink, Bridgeport *Bernard H. Levy, New Orleans *Robert J. Morrissey, Waterbury †Elmore R. Verlander, New Orleans *Frank A. Nemec, Glenbrook M a r yla n d D is t r ic t of C o lu m b ia Louis J. Berman, Baltimore *Edward E. Franck, Washington *Clinton C. Emich, Baltimore *Frederick A. Weber, Jr., Washington *Benjamin I. Levitas, Baltimore M assachusetts F lorida *Clarence C. Morris, Miami Anthony F. Kearney, Boston Albert A. Rabe, St. Petersburg M is s is s ip p i Walter L. Schuyler, Miami William L . Norton, Jackson H a w a ii M ex ico Pierson G. Dean, Honolulu *Harry M. Jacob, Sonora I daho M ic h ig a n *Virginia Dodge, Boise *Sidney Fields, Detroit I ll in o is William N. Hinds, Detroit *Bertram Holt Allison, E. St. Louis Karl P. Schechter, Detroit Edmund G. Arndt, Chicago Sol Irving Stein, Highland Park Richard C. Barnard, Winnetka Julian S. Tobias, Detroit *Ralph B. Brundrett, Chicago Christopher C. Whitlock, Detroit *Henry de Leeuw, Chicago M in n e s o t a Walter H. Floerke, Chicago Henry M. Lethert, St. Paul Chester L. Grimes, Chicago Harry I. Grossman, Chicago M is s o u r i *Everett L. Hahne, Chicago *Weber N. Federspiel, St. Louis William G. Hessler, Chicago Harry J. Kuehn, Kansas City Sidney Garb Karras, Chicago *Carl G. Neureuther, St. Louis *William B. Lawrence, Chicago *Delbert A. Sears, Kansas City *Albert Lawrence Nelson, Bellwood M o n t a n a Roy C. Olson, Chicago Maurice R. Colberg, Billings *William T. Prichard, Chicago *Jennings L. Mayland, Dillon *Marvin J. Robinson, Chicago *Clarence D. Misfeldt, Great Falls Philip Rootberg, Chicago *Harry R. Ulmer, Jr., Missoula *Paul F. Seiger, Barrington *Lester C. Skeels, Chicago N ew J ersey *Orville L. Smythe, Chicago *Bert Edwin Stromberg, Trenton William W. Wakelee, Chicago *Oscar A. Zeitz, Nutley * Admitted as associates. † Advanced to membership. The Certified Public Accountant 15

N ew Y ork O regon *Albert E. Andrew, New York *William John King, Portland *William F. Benedict, New York *Alford L. Lukens, Portland *E. F. Boelte, New York *Marvin E. Piquet, Eugene William John Dolan, New York Cullen T. Rist, Corvallis *William M. Ely, Phoenix *Ralph A. Falcone, New York P ennsylvania J. Morton Finke, New York *Donald J. Atwater, Philadelphia *Arthur E. Fox, New York Ivan S. Babbitt, Erie *Charles H. Friedrich, New York John B. Moore, Philadelphia Ellis W. Goode, New York *Charles E. Niessen, Philadelphia Russell H. Gowland, Buffalo *Charles P. Rooney, Pittsburgh Frederick G. Heineck, New York *Elmer I. Rosen, Philadelphia *Cyril H. Hermele, New York *M. Clyde Sheaffer, Harrisburg Norman Hill, New York *Frank B. Snyder, Carlisle †Raymond T. Hyer, New York *Paul C. Spiese, York Abraham Israelite, New York *Richard J. Steiner, Pittsburgh Max Katz, New York *Thomas P. Strauss, Hanover Norman P. Kistler, New York R hode I sland *Joseph Kruse, Albany *Rowland W. Lassen, New York Carl D . Laine, Providence Jay J. Livingston, New York S o u t h D a kota *L. Walter Lundell, New York S. S. Schouweiler, Rapid City *Abraham Marcus, New York Donald Margolis, Rochester T e n n e s s e e †Stewart B. Meding, New York *Philip H. Donovan, Chattanooga †Raymond F. Murphy, Syracuse *Joseph H. Talbot, Jr., Nashville Benjamin Neuwirth, New York *Joseph A. Oleske, New York T e x a s *Archibald T. Patterson, New York Arthur B. Beynon, San Antonio *Sydney Resnick, New York *W. Dawson Carter, Houston Herbert H. Reyburn, New York *Maurice D. Gowland, Corpus Christi Ira H. Ruben, New York *James L. Hamilton, Dallas *Jacob L. Rubin, New York *Thornton C. Huddle, San Antonio Joseph A. Savage, New York *R. Drumwright Keys, Dallas *David Schiller, New York *Charles K. Moore, San Angelo *George Sharon, New York *Marion F. Munro, Dallas David Shechet, New York Jennings Bland Pope, Houston David S. Siegel, New York Walter G. Russell, Amarillo Rubin M. Siwek, New York Harry E. Taten, New York U t a h Isidor Tiktinsky, New York *Byron L. Tanner, Salt Lake City *Joshua Wachtel, New York *Leicester Warren, New York V ir g in ia *Albert Waxman, New York *Walker E. Burnham, Lynchburg Walter R. Wege, New York *Irving B. Struminger, Petersburg *John B. T. Whitt, Richmond eb r a sk a N W a s h in g t o n Corwin D. Moore, Lincoln *Gaylord L. Bullis, Seattle *William D. Kendall, Seattle N orth C a rolin a *Edward G. McCoy, Seattle *Harold Louis Daisy, Winston-Salem *Percy F. Stevens, Tacoma O h io *George Clifford Whittle, Olympia *Dale M. Beyring, Cincinnati W is c o n s in *Robert D. Borland, Cleveland *John H. Carpenter, Milwaukee Robert F. Gabele, Cleveland *Martin J. Fahey, West Allis *Benjamin R. Gehring, Columbus *Donald P. Hackney, West Allis *Burgess F. Geib, Toledo *Gordon J. Maier, Racine *Gilbert H. Hoffman, Cleveland *Maynard Reierson, Menasha *William F. Michalske, Cleveland *Lambert J. Ruffing, Green Bay *Joseph W. Robertson, Columbus *Edward I. Stillman, Milwaukee Wilbert C. Wehn, Cleveland Henry M. Winkel, Green Bay

O k l a h o m a Wy o m i n g *George H. Gustafson, Tulsa *Charles B. Coolidge, Cheyenne 16 The Certified Public Accountant

A d v iso r y C o m m it t e e o n S u r p l u s D i s ­ News About Institute Members p o s a l Hugh C. Tennent is chairman of an O f f i c e o f C o n t r a c t S e t t l e m e n t advisory committee appointed by the George O. May has been appointed a Treasury Department to assist the Trea­ member of the Appeal Board, authorized sury’s regional office in disposing of sur­ by Section 13 of the Contract Settlement plus war property in Hawaii. Act of 1944, to hear appeals from the findings of contracting agencies. U n iv e r s it y V i c e -P r e s id e n t Office of Price Administration Robert P. Briggs who has been on an extended leave of absence from the Uni­ Colonel George V. Rountree has been versity of Michigan to fill an assignment released from active duty with the Army with the Detroit Ordnance District, and at the request of Chester Bowles, Ad­ more recently with a St. Louis industrial ministrator, Office of Price Administra­ concern, has been appointed vice-president tion, to become head of the processed of the university. He has also been ad­ fruit and vegetable section of OPA’s vanced to the rank of a full professor of Food Price Division. Following almost accounting and will act as business man­ three years as Chief of the Contract ager of the university, assuming his new Service Division and the Fiscal Division duties on July 1st. of the Chicago Ordnance District, Colo­ nel Rountree has served for the past year A d v iso r y C o m m it t e e o n B u s i n e s s as Fiscal Officer in the Readjustment A dministration Division of the Army Service Forces at George D. Bailey, chairman of the In­ Washington. stitute’s committee on accounting pro­ N a v y R e c o g n it io n cedure, has been appointed a member of Lt. (j.g.) R. L. Hamlin (SC) USNR an advisory committee on business ad­ has been commended for performing ministration at Wayne University in “additional duty for the Commandant, Detroit. David D. Henry, executive vice- Puget Sound Navy Yard, in a most satis­ president of the university, is chairman factory manner.” In a communication to of this committee which includes three the Supervisory Cost Inspector of the members of the faculty and nine repre­ Thirteenth Naval District, the Com­ sentatives of various fields of interest mandant writes in part, as follows: served by a school of business. The com­ “During the past two years Lieutenant mittee has been established to advise (j.g.) Hamlin has worked with farm­ university officials as to priority of de­ ing out contractors manufacturing ur­ velopment of the specialized fields of gently needed material. . . . He has ren­ business and to review the program dered valuable assistance to the contrac­ toward which the university should move. tors in the Spokane area engaged in a large program covering vital material S t a t e C o m m is s io n o n P e n s io n s needed at Puget Sound Navy Yard for Joseph I. Lubin has been appointed fleet repairs. Lieutenant (j.g.) Ham­ a member of the New York State Com­ lin’s intimate knowledge of contractors’ mission on Pensions to serve for the bal­ problems, his administration of cost in­ spection, and the tact used in contacting ance of the unexpired term of Franklin and carrying out cost inspection with B. Holmes, who recently resigned, ending contractors in many difficult situations on March 5, 1946. arising from the cost-plus-fixed-fee con­ C o m m u n it y C h e s t tract have resulted in a considerable saving to the Navy and resultant pleasant Henry S. Puder has been appointed relationship between contractors con­ co-chairman of the 1945 Newark (N. J.) cerned and this activity.” Community Chest. THE C ertified P u b l i c ACCOUNTANT

A Bulletin of The American Institute of Accountants

Vol. 25 M a r c h , 1945 No. 3

New Changes in Selective Service Rules Selective Service rules governing oc­ gaged in an activity in war production cupational deferment of registrants ages or in support of the national health, 18 through 37 have been amended again. safety, or interest. (Forms previously The new rules are set forth in Local used may continue to be used.) Board Memorandum No. 115, as amended

February 21, 1945, copies of which were C ertification P r o cedure mailed to all members and associates of the Institute early in March. Public accounting firms desiring occu­ pational classification of staff assistants, R e g is t r a n t s 18-29 ages 18 through 29, (who have not been Registrants ages 18 through 29 may found disqualified or qualified for limited be granted occupational deferment only service only) should request certification (a) if one of fifteen federal government of Form 42-A (Special-Revised), by the agencies having jurisdiction over activi­ certifying agency with which the essen­ ties in war production or in support of tial client or clients whom the registrant the national health, safety, or interest, is serving are themselves dealing. The certifies the request for occupational clas­ request for certification should be sup­ sification submitted by an employer on ported by letters from such clients testi­ Form 42-A (Special-Revised) ; or (b) if fying to the necessity of the registrant in without such certification by government their activities. agencies the local board finds that such a registrant is indispensable and irreplace­ Registrants 30-33 able in an activity in war production or in Local Board Memorandum No. 115, as support of the national health, safety, or amended February 21, 1945, also contains interest, in which he is a necessary man new provisions relating to registrants and regularly engaged. Files of all regis­ ages 30 through 33 inclusive. It is now trants 18 through 29 will be reviewed and required that registrants in this age the new Form 42-A (Special-Revised) group, to be considered for occupational should be filed by employers by April 1st, classification, must be necessary to, as except in the case of registrants in this well as regularly engaged in, an activity age group classified as disqualified for in war production or in support of the military service or qualified for limited national health, safety, or interest. Fath­ service only, who may be granted occupa­ ers should be given greater consideration tional deferment if merely regularly en­ for occupational deferment than non-

PUBLISHED BY AMERICAN INSTITUTE PUBLISHING CO., INC. 13 East 41st Street, New York 17, N. Y. 2 The Certified Public Accountant

fathers in this age group. The phrase Mr. John L. Carey, “necessary to” refers both to the impor­ American Institute of Accountants, Dear Mr. Carey: tance of the individual’s position and the This is in reply to your telephone inquiry possibility that he could be replaced. this morning. You asked whether accounting services are included on the War Manpower R e g is t r a n t s 34-37. Commission’s List of Essential Activities. As you know, the List of Essential Ac­ Registrants ages 34 through 37 may be tivities issued by the War Manpower Com­ considered for occupational classification mission on January 13, 1945, includes the fol­ if merely “regularly engaged in” an ac­ lowing under Group 35: tivity in war production or in support "Technical Scientific, and Management of the national health, safety, or interest. Services—The supplying of technical, scien­ tific, and management services to establish­ Forms 42 or 42-A should be used in ments engaged in war production; union- requesting occupational deferment of reg­ management negotiation services; publication istrants ages 30 through 37. of technical and scientific books and jour­ The memorandum indicates that phys­ nals; and the services of Federal Reserve System district banks and branches (does not ically fit registrants ages 30 to 37, espe­ include services of member banks of the Fed­ cially those under the age of 34, will be eral Reserve System).” inducted to the extent necessary to fill The Chairman of the War Manpower calls in view of the decreasing number Commission’s Essential Activities Committee has interpreted Group 35 to include account­ of physically fit registrants available in ing services to war-production establish­ the age group 18 through 29. ments. This is in specific answer to your question. E ssentiality o f A c c o u n t in g For your further information, The List and The List of Essential Activities issued Index of Essential Activities, issued by the War Manpower Commission in February, by the War Manpower Commission is 1944, is still applicable to the present List of mentioned in Local Board Memorandum Essential Activities. In the index of this doc­ 115, as a guide to Selective Service local ument you will find on page 18, under the boards together with all other available heading, Index to List of Essential Activi­ ties, Part II, Nonmanufacturing, the item information, in determining the essenti­ “Accounting Services (to war production es­ ality of work in which a registrant is en­ tablishments)”, indicated as being included gaged. Question has arisen as to the place under Item 35 on the List of Essential Ac­ of accounting services in this list. tivities. Following is a letter from the National Sincerely yours, P h il ip P . M arenberg Roster of Scientific and Specialized Per­ Executive Officer sonnel, answering this question: National Roster

Liability of Accountants Formerly tal National Defense Appropriation Act, in Government Service 1942, to read as follows: “(j) Nothing in sections 109 and 113 Members of the Institute who have re­ of the Criminal Code (USC, title 18, secs. turned from the armed forces or civilian 198 and 203) or in section 190 of the positions in government departments Revised Statutes (USC, title 5, sec. 99) have inquired about federal statutes pro­ shall be deemed to prevent any person hibiting former government employees by reason of service in a Department or from prosecuting claims against the the Board during the period (or a part United States for a period of time after thereof) beginning -May 27, 1940, and ending six months after the termination leaving the government service. of hostilities in the present war, as pro­ The latest legislation on this subject claimed by the President, from acting as is section 701 (b) of Title V II of the counsel, agent, or attorney for prosecut­ •Revenue Act of 1943, which amended ing any claim against the United States : section 403 (j) of the Sixth Supplemen- Provided, That such person shall not The Certified Public Accountant 3 prosecute any claim against the United the state committees. The Institute’s edu­ States (1) involving any subject matter cational director had conferred with leg­ directly connected with which such per­ islative committees of the Texas and New son was so employed, or (2) during the York societies. As a result, a number of period such person is engaged in employ­ the provisions recommended by the In­ ment in a Department.” stitute were adopted. The act provides that the term “de­ In Ohio a mail vote of the membership partment” means the War Department, resulted, by a narrow margin, in a ma­ the Navy Department, the Treasury De­ jority against introduction of a regula­ partment, the Maritime Commission, the tory bill. Other state societies have this War Shipping Administration, Defense type of legislation under consideration Plant Corporation, Metals Reserve Com­ and may propose it for introduction at pany, Defense Supplies Corporation, and later sessions of the legislatures. Bills Rubber Reserve Company, respectively. providing for continuous registration of public accountants have been introduced President Broad Addresses at the instance of groups of non-certified Maryland Association public accountants in California, Georgia, Minnesota, and Ohio. These bills would Samuel J. Broad, president of the confer a title, such as “registered public American Institute, addressed a dinner accountant,” upon those licensed. They meeting of Maryland Association of Cer­ would create a permanent second class of tified Public Accountants in Baltimore, public accountants recognized by the state February 27th, at which successful can­ without interfering with the continued didates in the November CPA examina­ issuance of certified public accountant tions were entertained as guests of the certificates under existing statutory pro­ state society. His subject was “Opportu­ visions. The situation in these states nities of the Accounting Profession to Aid would be similar to that which existed in Government and Business.” CPA certifi­ Illinois for a decade ending in 1943 when cates were presented. the laws providing for issuance of cer­ tificates and registration of public ac­ Maurice E. Peloubet, treasurer of the countants were consolidated and regis­ Institute, addressed York (Pa.) Chapter, tration of public accountants in the future NACA, February 21st, on “Inventory was terminated. Control in Anticipation of Postwar Problems.” Listings in Directories State Legislation Members of the Institute have recently made inquiry as to the views of the In­ Accounting legislation of the two-class stitute on listings in a directory of certi­ regulatory type has been introduced in fied public accountants, proposed by a Minnesota, New York, and Texas, in publishing company in Chicago. each case supported by the state society In response to an inquiry by this com­ of certified public accountants. The Cali­ pany, the secretary of the Institute, with fornia society has indicated an intention the approval of the committee on profes­ of introducing a bill of this type after the sional ethics, in a letter dated November directors had considered a mail vote of 22, 1944, described the type of listings in the membership which, by a very narrow such a directory which it was believed margin, favored regulatory legislation. would conform with the Institute’s rules Each of these four societies had corre­ of professional ethics. The text of this sponded with the Institute on the subject letter is as follows: and the latest draft of the Institute’s form “The committee on professional ethics of regulatory bill had been provided to has considered your letter of October 4 The Certified Public Accountant

25th, and this letter will serve to convey members of the firm are certified public to you the committee’s opinions on the accountants of that state. questions which you submitted. “(2) In interpreting Rule No. 10, the “It should be made clear at the outset committee has taken the position that the that the committee’s jurisdiction in this listing in a directory of the name, ad­ matter is limited to the question of what dress, and firm affiliation of a member, type of listings in a directory such as the with the designation ‘certified public ac­ one you propose to publish might result countant’ and ‘Member, American Insti­ in complaints against members or asso­ tute of Accountants,’ where appropriate, ciates of the American Institute of Ac­ but without any further descriptive lan­ countants, alleging violation of the In­ guage, would not be considered a viola­ stitute's rules of professional conduct. tion of the rule. In response to the The applicable rule seems to be Rule No. specific questions in your letter, the com­ 10, two interpretations of which have al­ mittee believes that its interpretation may ready been published.* I believe that logically be extended to permit the in­ copies of these interpretations have al­ clusion of the states which have issued ready been furnished to you, but I en­ CPA certificates to the individual and the close additional copies herewith in con­ dates of issuance, and membership in junction with this letter. state societies of certified public account­ “It should also be made clear that in ants, but not the date of birth of the in­ replying to your questions, the Institute dividual or memberships in organizations does not intend to express any opinion on which are not professional societies of the value or benefit to its members of list­ certified public accountants.' ings in the proposed directory, nor on “ (3) The opinions in paragraphs (1) the fairness or reasonableness of charges and (2) have been predicated upon the which may be made for such listings. condition that listings will all be in one Neither does the American Institute of size and style of type, and that no inser­ Accountants sponsor the directory in any tion will be more prominent than any way, nor does it undertake to approve or other, except for the amount of space in­ disapprove the publishing of such a direc­ volved, as stated in your letter. tory. “ (4) The committee is of the opinion “ (1) The committee sees no possibility that inclusion in the so-called biographi­ of violation of the rules of professional cal data of offices held in professional conduct in the listing in a directory of organizations, fields of specialization, and the name and address of a member of bank references, would be regarded as a the American Institute of Accountants, contravention of Rule No. 10. However, or of a firm of which a member or mem­ the committee believes that it would be bers of the Institute are partners. It permissible, under firm names, to list the should be pointed out, however, that if location of other offices of the firm, but the directory is advertised as a list of suggests that the designation ‘other of­ certified public accountants only, as your fices’ would be preferable to ‘branch of­ letter suggests, some question may arise fices.’ as to the listing of any firm of which the “The committee does not feel that it partners are not all certified public ac­ is in a position to object to the listings countants. The laws of some states pro­ of officers and committees of the Amer­ hibit a firm from representing itself as ican Institute of Accountants, though it ‘certified public accountants’ unless each is pointed out that this information is in­ partner is a certified public accountant. cluded in the Institute’s yearbook which In some states the law is even more strin­ goes to all members. As the listing of the gent in that within such a state no part­ membership of all the committees of the nership shall use the words ‘certified public Institute would be extensive, you may accountants’ in describing the partner­ wish to consider omitting the committees ship or the business thereof unless all the altogether, or merely listing the names of the committees without the members *See The Certified Public Accountant thereof. We cannot speak for the state for March 15, 1944, p. 8, and September 30, societies on the question of listing the of­ 1944, p. 4. ficers of the state societies. The Certified Public Accountant 5

“We do not understand your reference to the American Society of Public Ac­ Secretary’s Notes countants, since we are not familiar with this organization. If your listings are to be confined to certified public account­ Council and Annual Meetings ants, as suggested, it might not be ap­ Revised rules of the War Committee propriate to list officers in any organi­ on Conventions will make it possi­ zation which is not composed of certified ble for the council of the Institute public accountants. It may be that you which had previously decided to cancel have in mind the American Society of its spring meeting, to hold the meeting Certified Public Accountants which merged with the American Institute of on a modified basis. The new rules pro­ Accountants in 1936 and is no longer vide that meetings may be held without active. specific permission if the total attendance “P. S. If in communications to certi­ from out of town does not exceed 50, fied public accountants you make any ref­ with unlimited attendance by persons liv­ erence to the opinions of the Institute’s ing in the city in which the meeting is committee on professional ethics on this held who will not require hotel or trans­ matter as expressed in this letter, it is portation accommodations in order to at­ requested that the full text of this letter tend. On this basis the council can be quoted.” meet in New York without violating the rules. The chairmen of war committees The Journal of Accountancy and important administrative committees, Sponsors Section 722 Articles and representatives of the Advisory Council of State Society Presidents, the The Journal of Accountancy is spon­ Association of CPA Examiners, and the soring a series of 13 articles on “The American Accounting Association could Section 722 Bulletin and the Controversies also be invited to attend. The council has Resulting,” under the editorship of J. K. voted by mail ballot to hold the meeting Lassen The primary purpose of this accordingly at the Waldorf-Astoria Ho­ series will be to summarize succinctly tel, New York, May 1st and 2nd. the facts which must be proved and the Under t he same rules it seems likely method of reconstruction under the that an annual meeting will be held at the Treasury Bulletin interpretation, and to Palmer House in Chicago in October, suggest alternative methods of proof and 1945, as planned, though the attendance alternative methods of period reconstruc­ may have to be limited if present restric­ tion under statutory interpretation, other tions continue in effect. A draft of the than those recognized in the Treasury program for the annual meeting is now Bulletin, thereby highlighting the con­ being considered by the committee on troversies which exist. technical sessions. The group of authors, in addition to Mr. Lasser, include the following Insti­ N o n p a r t is a n T a x C o m m is s io n tute members: Russell S. Bock, Hal Following a conference with other Canary, Thomas J. Dolan, Scott H. Dun­ members of the House Ways and Means ham, Harold Eppston, John D. Filson, Committee, and representatives of the Walter A. Hurley, Charles Melvoin, Ed­ Institute, Representative Frank Carl­ win S. Reno, Troy G. Thurston, Charles son of Kansas on February 19th intro­ N. Whitehead, and T. Dwight Williams. duced H. J . Res. 109, the text of which The first article in the series is is the same as his bill of last year to scheduled to be published in the May establish a Federal Tax Commission com­ issue of The Journal of Accountancy posed of members of the Senate Finance and the other articles will follow in sub­ Committee, members of the Ways and sequent issues. Means Committee, and representatives of 6 The Certified Public Accountant agriculture, business and industry, tax­ to Robert Heller, author of the National payers and consumers, and of an account­ Planning Association pamphlet, Strength­ ant, a lawyer, and an economist. The ening the Congress, comments and crit­ Commission would make recommenda­ icism on that portion of the study which tions to Congress for the purpose of dealt with federal government accounting simplifying the federal tax system and and auditing. establishing a long-range integrated fed­ eral tax policy. S e c u r it i e s a n d E x c h a n g e C o m m is s io n The bill was originally introduced at Representatives of the Institute met the Institute's suggestion, and the Insti­ with the full membership of the Secur­ tute supported it vigorously last year. ities and Exchange Commission in Feb­ As a result there was wide, favorable ruary, to discuss Commission policy and comment in the press, scores of members procedure in adopting rules and prece­ of Congress declared themselves in favor dents on questions of accounting, and of the idea, and a number of prominent with the Chief Accountant and his staff organizations officially endorsed it, in­ to discuss technical questions of common cluding the American Bar Association, interest which are now under considera­ the National Association of Credit Men, tion. and the New York Chamber of Com­ The president of the Institute, on merce. Plans for arousing renewed inter­ March 1st, addressed a letter to the est in the measure were discussed at a President of the United States, suggest­ meeting of the executive committee on ing that the present vacancy in the Secur­ March 9th. ities and Exchange Commission be filled by appointment of a trained accountant. T a x -R e t u r n E x t e n s io n s No special notice was sent to members P u b l ic I n f o r m a t io n P a m p h l e t s and associates this year with regard to extensions of time for filing corporate Several years ago, the Institute pub­ tax returns. Maurice Austin, chairman lished two so-called public information of the Institute’s tax committee, in Febru­ pamphlets, Accounting and Your Pocket- ary learned from official sources that the book and Financial Statements— What procedure would be the same as that of They Mean, which were designed to con­ last year and that collectors had been vey to persons not trained in accounting notified to this effect. It was assumed a general understanding of the nature that members would obtain the informa­ and purposes of auditing and financial tion without difficulty from local collec­ statements, respectively. During the tors. period of the war these pamphlets have not been advertised, and very few copies F e d e r a l G o v e r n m e n t A c c o u n t in g have been distributed, since the Institute’s The unofficial committee of representa­ war program minimized this type of tives of the Institute and prominent fed­ activity. Last month an official of a eral government accountants, headed by federal government war agency requested George P. Ellis, is studying proposed copies of these pamphlets for distribu­ legislation which would provide for audit tion to members of his staff who were not of federal government corporations by trained in accounting, in order to improve the General Accounting Office. Repre­ their understanding of the subject in sentatives of the Institute are prepared relation to duties which they were re­ to testify on the proposed legislation if quired to perform. hearings are called. In February the chairman of the Insti­ P hiladelphia M e e t i n g tute’s subcommittee on federal govern­ The secretary of the Institute spoke at ment accounting, Lloyd Morey, submitted a meeting of the Philadelphia Chapter The Certified Public Accountant 7 of the Pennsylvania Institute of Certi­ of the president, discussed the matter fied Public Accountants, February 27th, with the Administrator of the Wage and on “The Accounting Profession’s New Hour Division. It was stated that there Opportunity.” The meeting was the an­ was no existing policy that would re­ nual occasion on which successful candi­ quire investigation of accounting firms dates in the CPA examinations from the at this time ; that in the absence of any Philadelphia area are granted their cer­ unusual circumstances there should be no tificates by the state board of accountancy. necessity to examine into the status of An unusual feature of the meeting was a staff assistant, employed by an account­ the presentation of a CPA certificate to ing firm, whose salary was $200 a month the daughter of a member of the Phila­ or more; that the form of questionnaire delphia Chapter, William Reuben Lef­ referred to was not appropriate for the ferts. In recognition of what was prob­ purpose of considering exemption on ably the first occasion of this kind, the professional grounds, and that its use spokesman for the state board asked Mr. should be limited to clerical and office Lefferts himself to present the certificate staffs of accounting firms. to his daughter, Anna Louise. M. C. Conick, president of the Pennsylvania E x t r a -C u r r ic u l a r Institute, and W. E. Shissler, attorney The Institute’s staff frequently encoun­ member of the state board, delivered ters interesting situations somewhat out­ addresses at the meeting. side the ordinary line of duty. Last month, a complaint was received from a R o b e r t M o r r is A s s o c ia t e s member that a financial - management While in Philadelphia, the secretary company, of excellent reputation, was was a guest at luncheon of W. H. soliciting tax practice in his vicinity. Woodring, chairman of the Philadelphia After preliminary communication with Chapter of the Robert Morris Associates officials of the company by telephone, the committee on cooperation with public secretary had a two-hour conference with accountants, and Raymond Duning, secre­ several of its representatives. While the tary of the Robert Morris Associates. company is not registered to practice be­ Plans for a postwar program of coöpera­ fore the Treasury Department and is not tion between bankers and accountants subject to the rules of conduct of either were discussed. the legal profession or the accounting profession, its officials desire good rela­ W a g e s a n d H o u r s tions with both professions. To the ex­ An accounting firm in an eastern city tent that tax questions come under its was recently requested to have its em­ consideration as part of its management ployees, including accounting staff, fill service, the company wishes to conduct out questionnaires for the regional office itself in conformity with prevailing of the Wage and Hour Division, as a ethical standards. It is believed that the basis for determining whether or not cause for complaint of the sort which such employees were exempt from the actuated the conference will be removed. provisions of the Fair Labor Standards J. L. C. Act. It was stated that the request was being made merely as a routine check. Membership Directory The questionnaire forms submitted were A new directory, including alphabeti­ not designed to elicit information which cal and geographical lists of American would be useful in determining the pro­ Institute members and associates, was re­ fessional status of an employee, but cently distributed to the entire member­ rather an executive or administrative ship and to the headquarters of a limited status. On receiving this report, the number of national organizations and secretary of the Institute, at the request government agencies. 8 The Certified Public Accountant

for a preferred treatment. Current and Research Department postwar problems of income determina­ tion and reporting were recognized by the appointment of subcommittees on income

A c c o u n t in g C o m m it t e e M e e t in g statements and on surplus. On February 22nd the committee on accounting procedure met to discuss S t a t e m e n t s o f I n c o m e problems relating to accounting for termi­ One of the areas to be reviewed by the nated war contracts and statements of subcommittees is that involving an evalu­ income and surplus. In the consideration ation of the philosophies which may of accounting treatment to be given sub­ underlie the design and preparation of a contractors’ claims, the differences in statement of income for a particular interpretations which would permit alter­ period. At least two concepts are prev­ native procedures were reported. A cur­ alent: (1) The significant data to be rent draft of the proposed bulletin on reported by a statement of income are terminated war contracts explains these those determining the financial results of differences and makes no recommendation the business for the current period, and (2) Statements of income are significant as links or unit segments of a series of statements which would permit summa­ Membership tion of the incomes reported in the various yearly statements as an accurate measure Despite the heavy pressure under of the total income for the entire period. which members of the accounting The difference in these concepts may be profession are working at this season illustrated by the manner of reporting a of the year, many members of the write-off in 1944 of an excess reserve committee on membership have for product guarantees created by charges found time to carry out their assign­ to income in 1934. By the first concept, ments. Their work is providing the the write-off is not considered applicable headquarters office with valuable in­ to 1944 in the determination of that year’s formation as to which certified pub­ income and, if it is very material in lic accountants in the respective amount, it should not be reflected in the cities are eligible for and interested annual income statement. A statement of in membership. Since the report of income prepared to reflect the second last month 23 applications have been view would, however, display the write­ received through members of the off as an item of current income of 1944 committee: 5 from the committee necessary for the adequate reporting of representative in Minneapolis; 3 total income for the 1934-1944 period. from Bridgeport; 3 from Cleveland; In recent Accounting Research Bulle­ 2 each from Colorado Springs, Pitts­ tins, the statement “should be included burgh, and Toledo; 1 each from Chi­ in the current income statement unless cago, Greensboro, N. C., Louisville, such inclusion would result in distortion, Washington, D. C., Hartford, and in which event the adjustment may be Wheeling, W. Va. made through earned surplus” is evidence A total of 105 members and as­ that these concepts of income have been sociates were admitted to the Insti­ considered. The term distortion of in­ tute in February, and 4 associates come apparently would be most useful were advanced to membership. Total only when applied in relation to the number of members and associates, significance of the income reported for as this bulletin goes to press, is 8526. a current period. If that is true, distor­ tion would be measured in relation to the The Certified Public Accountant 9 materiality of the amount of the item and The court said, “In certain aspects to the nature of the transaction creating an option may be spoken of as ‘property’ it. Thus, distortion could not result from in the hands of the option holder. . . . transactions arising in the course of When the option price is less than the normal current operations even though market price of the property for the the gain or loss from the particular item purchase of which the option is given, it were very material. However, material may have a present value and may be items resulting from extraneous trans­ found to be itself compensation for actions and events applicable to other services rendered.” These statements are periods (the sale of property to realize not helpful in determining the value of a loss for tax purposes in the current an option right under specific circum­ year, or the condemnation of property stances. Because of the facts of the which results in a gain or loss, for ex­ present case, the decision provides no example) might result in a distortion of basis upon which an “investment option” current income if reported as a material could be identified. item of that income. C a r m a n G . B l o u g h , Director of Research. Stock O ptions The subcommittee on stock options met February 16th to review tentative drafts of a proposed bulletin and to consider the problems of stock-option valuation. CPA Examination Schedule Members of the subcommittee reported State accounting boards adopting the opinions of various investment bank­ the uniform examinations prepared ers and others relative to this problem. by the American Institute of Ac­ The Supreme Court’s decision in Com­ countants will hold the regular spring missioner of Internal Revenue v. Smith examinations on May 16, 17, and 18, (February 26, 1945) may provide the 1945, according to the following subcommittee with a partial answer to schedule: vexing problems of accounting for stock options granted to officers and employees. Wednesday, May 16th: 1:30 to 6 :00 P.M.—Accounting Practice, In reversing an opinion of a court of Part I. appeals, the Supreme Court held that when stock options, given as compensa­ Thursday, May 17th: 9:00 A.M. to tion, had no determinable value at the 12:30 P.M.—Theory of Accounts. time of the option grant, the amount of income given to an employee as compen­ Thursday, May 17th: 1:30 to sation by means of the stock options 6 :00 P.M.—Accounting Practice, should be determined by the excess of the Part II. market value of the shares over the op­ Friday, May 18th: 9:00 A.M. to tion price at the time of their exercise. 12:30 P.M.—Commercial Law. An application of this rule would sug­ gest that a corporation granting to an Friday, May 18th: 1:30 to 5:00 employee options at a price equal to or P.M.—Auditing. in excess of the market value of the Dates for future examinations are optional shares at the time of the grant listed below: should record as an element of the em­ ployee’s compensation, an amount or November 7, 8, and 9, 1945. amounts which can be determined only May. 15, 16, and 17, 1946. if, as, and when the employee elects to November 6, 7, and 8, 1946. exercise his option. 10 The Certified Public Accountant

tion of war veterans and accounting Educational Department students. Columbia University has announced plans to establish a new special graduate A c c o u n t in g E d u c a t io n curriculum in professional accountancy, Acting on the request of Christopher beginning September, 1945. The new H. Knoll, a member of the committee three-year course leads to an M.B.A. on education, a draft of a pamphlet on degree and is designed to attract outstand­ accounting as a career has been prepared ing students who have a broad educational by Raymond G. Ankers and submitted background in liberal arts. To be admit­ to the committee, as a basis for a pro­ ted, applicants must have completed three posed occupational monograph to be pub­ years of courses in liberal arts, aggregat­ lished by the Institute for the informa­ ing 90 semester hours. Basic subjects in technical accounting, law, business, finance, and economics are offered in the first two years. An elective third year OPA Forms "A” and "B” of advanced subjects may be pursued while students are employed in gaining Through special arrangements be­ experience in accounting practice. tween the Office of Price Adminis­ The Columbia course and the mem­ tration and the American Institute orandum on a suggested curriculum in of Accountants, OPA will distribute accounting prepared by Edwin S. Reno specimen copies of the new finan­ of Pittsburgh, Pennsylvania, were sub­ cial reporting forms “A” and “B” mitted to the committee on education for to all Institute members and associ­ review and comment. The curriculum ates. The purpose of these forms, suggested by Mr. Reno is based on the which are similar to those distributed belief that college courses should teach a year ago, is to provide OPA with the student fundamental subjects which basic financial information consid­ will probably be learned only at college, ered essential to the operation of an and should not cover subjects that can equitable wartime price-control pro­ be better learned after leaving school, gram. The forms have been sent by through observation and experience in OPA to some 37,000 manufacturers the business world. throughout the country, approxi­ The committee on education has had mately twice the number receiving some correspondence with Horace L. them last year. Submission of these Field, chief of the Bureau of Qualifying forms to OPA is voluntary, but it is Certificates and Professional Examina­ strongly urged by the industry com­ tions, State Education Department, mittee which assisted in their prep­ Albany, New York. A questionnaire to aration. Form “A,” which is an an­ colleges and universities offering ap­ nual report, should be returned proved courses indicated that the Bureau within three months after the close was considering the advisability of of the company’s fiscal year; form changing its requirement to include 30 “B,” a quarterly report, within one semester hours of accounting, with a con­ month after the end of the quarter. tent of 40 per cent strictly liberal arts Information supplied in these forms work and 60 per cent business and is regarded as strictly confidential by accounting subjects. Mr. Field more OPA and may be released only to recently stated that it has been prac­ other federal agencies which are au­ tically decided not to adopt requirements thorized to secure similar data from as rigid as those originally proposed but the same companies. instead to require 40 per cent liberal arts college work, 50 per cent business The Certified Public Accountant II courses, and 10 per cent free electives countants at St. Louis are available upon from either liberal arts or business. The request at the Institute’s office. Bureau plans to continue the bonus of 25 per cent to graduate courses in ac­ Board of E xaminers counting. Henry E. Mendes, chairman, has called a meeting of the board of examiners for P roject on S election of P ersonnel 9:30 A.M. Monday, March 19th, at the The committee on selection of person­ Institute’s office in New York. nel met at the New York Athletic Club The chief examiner has submitted his on Friday, February 9th. The chairman, report to the board covering the examina­ Warren W. Nissley, announced that tion of November, 1944. The examina­ tion was offered in 41 states, District of arrangements had been made with Pro­ Columbia, one territory, and the Treasury fessor Leo H. Schmidt of the Harvard Department. One cooperating state and Graduate School of Business Administra­ three territories offered no examination tion to work with Dr. Kenneth W. in November. A total of 1920 persons Vaughn in the development of achieve­ sat for the examination. The examination ment tests. The committee discussed at papers of 981 candidates were submitted considerable length the proper content to the Institute for grading. of such tests and the desirable levels at The percentage of candidates passing which they should be prepared. in each of the subjects is as follows: It was decided to draft achievement examinations at three levels. The first- A uditing...... 60.5 level examination will test accounting stu­ L a w ...... 46.6 dents at the end of the first full-year Theory of Accounts...... 78.3 course in accounting. The purpose of the Accounting Practice...... 13.9 examination will be to help students de­ cide whether or not they should continue The percentage of passes in law and in accounting and to assist the school in auditing are somewhat lower than those counseling these students. The second of the two previous examinations, but examination is planned for accounting the percentages for theory of accounts majors at the time of graduation from and accounting practice are higher. college. The tentative plan is to use it T homas W. Leland, Educational Director. primarily as a test of the qualifications of applicants for positions as junior ac­ countants. No definite plans have been adopted as yet for the administration of Tax Department the examination. The third-level exam­ ination is planned to test the qualifica­ tions of juniors for promotion to the Congressional Consideration of rank of semi-senior or senior. This P ostwar T axation examination will probably be made avail­ T he Joint Congressional Committee on able only to members of the American Internal Revenue Taxation has reported Institute of Accountants. The present several executive sessions with repre­ plans are wholly tentative and subject to sentatives of the Treasury and Congres­ change as may be advisable after the sional tax experts to consider postwar experimental tests have been developed tax plans recently submitted by various and tried. No tests are available for dis­ organizations. Since these were execu­ tribution at the present time. tive sessions, no details have been dis­ Reprints of Mr. Nissley’s address on closed. The House Republican Postwar selection of personnel at the 57th annual Tax Study Committee is also continuing meeting of the American Institute of Ac­ to investigate the subject of postwar taxa­ 12 The Certified Public Accountant tion. However, prospects for the draft of of Representatives. This approach to the a written postwar tax bill do not seem highly technical and complex social-se­ likely in the near future. One of the curity problem parallels the proposal long main reasons is that the official trend is urged by the Institute for the appoint­ against tax reduction until after the end ment of a nonpartisan tax commission to of the war in both the European and simplify the tax structure. The excellent Pacific theaters. A recent statement on work of the Advisory Council on Social the subject was made by Secretary Mor­ Security, appointed by the Senate Special genthau in his annual report to Congress, Committee on Social Security and the on February 14th, for the 1944 fiscal Social Security Board in May, 1937, has year: “Little, if any, reduction in tax been referred to by Senator Vandenberg rates should be anticipated until after in urging the present appointment of a the cessation of major hostilities on all similar commission. fronts.” On the other hand, the present activity may be one more indication of A vailability o f F o r m s 1120 a n d 1040 Congressional planning on specific as­ The shortage of Form 1120 and to a pects of postwar taxation, such as (1) lesser degree of Form 1040 in collectors’ expediting carry-back refunds and avail­ offices in the New York area, and pre­ ability of postwar excess-profits tax sumably in other parts of the country bonds; (2) incentive-taxation proposals during early February, was called to the in the form of accelerated depreciation attention of the Bureau of Internal on new equipment, special provisions for Revenue by Maurice Austin, chairman small, new and growing business, and of the committee on federal taxation. Im­ increased specific exemption on excess- mediate reply was received to the effect profits tax; and (3) possible selective tax that supplies of these forms sufficient to reductions or exemptions to encourage in­ cover normal demands were being sent to vestment and consumption. collectors’ offices. This condition was It is clear that the emphasis on these found shortly thereafter to be corrected. limited aspects of postwar taxation does R e b e c c a N e w m a n G o l u b , not envisage the long-range, integrated, Technical Assistant to the relatively simple tax structure advocated Committee on Federal Taxation. by the American Institute of Account­ ants, which would be the goal of the work of a nonpartisan tax commission such as Sons of Institute Members with the Institute has proposed. The tax com­ the Armed Forces mittee has noted with great interest that Representative Frank Carlson of Kansas, L. William Seidman, (son of Frank E. has again introduced his bill, now desig­ Seidman, Grand Rapids, Michigan)— nated as H. J. Res. 109, to establish a Lt. (j.g.) USNR. federal tax commission to simplify the federal tax system. Former Staff Member Wounded V a n d e n b e r g R e s o l u t io n fo r S o c ia l in Action S e c u r it y A d v is o r y C o u n c i l Senator Arthur H. Vandenberg has in­ Second Lt. Walter R. Settle, who left troduced S. Con. Res. 3 providing for a the employ of the American Institute of committee of experts to be appointed by Accountants to join the United States the Joint Congressional Committee on Army in January, 1942, was recently re­ Internal Revenue Taxation to study the ported as wounded in action in the Eu­ social-security law and to recommend ropean area. Eleven members of the In­ changes. This resolution has been passed stitute staff have served with the armed by the Senate and referred to the House forces in the present war. The Certified Public Accountant 13

P u b l ic F i n a n c e a n d T a x a t io n Public Information Department Washington was the point of origin of a news dispatch early in February an­

A c c o u n t a n c y i n t h e N e w s nouncing the formation by the American Institute of Accountants, at the invita­ Evidence that opinions of the account­ tion of Senator Harry F. Byrd, of an un­ ing profession on public problems are official committee “to study the govern­ worth putting into the day’s news was ment’s problems of accounting control, offered on several occasions in February. auditing, and financial reporting.” The Subjects dealt with included aid to re­ dispatch appeared in the New York turning veterans, need for improvement Herald Tribune and added that “the com­ in federal government accounting, fed­ mittee will attempt to work out sugges­ eral taxation, and the relation of the tions as to how the entire federal financial American capitalistic system to produc­ structure may be more clearly audited for tion and jobs. the benefit of Congress and the tax­ payer.” M a i n t a i n i n g P rofessional A statement of the position of the S t a n d a r d s American Institute of Accountants in the One of America’s important news­ matter of federal corporate taxation after papers, the Cleveland Plain Dealer, took the war was another contribution to pub­ an editorial in The Journal of Account­ lic opinion which found its reflection in ancy as the basis for a warning against the daily press in February. This state­ relaxation of professional standards for ment was from an address by Maurice veterans desiring to enter the profes­ Austin, chairman of the committee on sions. federal taxation, before the annual Fi­ Under the title “Maintain the Stand­ nance Conference of the American Man­ ards,” the Plain Dealer published an edi­ agement Association. Chairman Austin’s torial which opened with the words: “The comments were considered so newsworthy Journal of Accountancy calls attention to that the Associated Press distributed an the dangers inherent in proposals to relax abstract of his address to its member for veterans of the war the rules govern­ papers, and this dispatch appeared in ing admission to the professions.” Pittsburgh, Schenectady, Wilmington, Quoting one full paragraph in which The Del., and elsewhere, on February 1st. The Journal said, among other things, that dispatch featured Mr. Austin’s statements “we can see no way, however, of con­ that (a) heavy taxes are inevitable for ferring upon a man by resolution or years to come and (b) there is a point statute the qualifications to practice ac­ beyond which high tax rates defeat their counting nor any way to judge whether own purposes. he has such qualifications except by ap­ plication of the customary standards of O t h e r N e w s I t e m s education, experience, and examination,” On February 27th, at a dinner meeting the Plain Dealer said, “The soundness of of Philadelphia chapter of the Pennsyl­ the point of view expressed . . . in The vania Institute of Certified Public Ac­ Journal of Accountancy can hardly be countants, a group of new certified pub­ questioned. . . . That a great majority of lic accountants of Pennsylvania heard those in the armed forces are profiting the secretary of the Institute state that greatly from their experience there is a new opportunity for the accountancy little doubt. But that does not mean that profession lies in its becoming “the uni­ a year in a panzer division is an versally recognized authority on the acceptable substitute for a prescribed year measurement of income.” Requests for of premedical training.” copies of this address were received 14 The Certified Public Accountant

from the editors of Vital Speeches maga­ a heading which read: “Opposes Incentive zine and of the American Banker, after Tax—Accountancy Journal Sees Plan they had seen daily newspaper reports. Nullifying ‘Ability to Pay.' ” Proposals by individual members of Development of editorial and news re­ Congress and officials of the government flections and reports of accountancy calling for incentive taxation as a means opinion is a major objective in the Insti­ of stimulating business after the war tute’s public information program. All prompted an editorial in The Journal of the items noted in this column were based Accountancy which in turn proved the on advance material and information sent basis for references in the press to the to the press by the staff. position of the Journal in this matter. For example, the New York Times pub­ F r a n k A. G a l e . lished a news digest of the editorial under Assistant Secretary.

Election of Members

C a l ifo r n ia M a r yla n d John D. Brethauer, Berkeley *John L. Buckley, Jr., Baltimore *Mark Daniels, Jr., San Francisco *Saul H. Frame, Baltimore *Harland E. Holman, Los Angeles William C. Fraser, Baltimore *George L. Johnson, San Francisco *Harold M . Kaufman, Baltimore Carl N. Mather, Jr., Los Angeles *Felix J. Weiner, Baltimore Jack Wideman, Hollywood M assachusetts F lorida Warren S. Anthony, Boston Jewell A. Davis, Jacksonville Egidio J. Conti, Worcester *Thomas W. Saltmarsh, Pensacola *Douglas B. Lincoln, Boston M ic h ig a n G eorgia *Ethleen Lasseter, Atlanta *James R. Blakemore, Detroit *Glenn A. Touchton, Atlanta Russell A. Buri, Detroit Robert S. Davis, Detroit I d ah o Robert L. Dixon, Jr., Ann Arbor *Lester J. Randall, Wallace *John H. Ryckman, Detroit *Lynn A. Townsend, Detroit I l l in o is Joseph L. Adelman, Chicago M in n e s o t a Renick H. Buckles, Chicago *Ora Dale Gay, Minneapolis *Joe Crabtree, Chicago M is s o u r i *Gerold L. Elder, Salem Ralph E. Bostwick, Kansas City *Joseph A. Kincaid, Chicago *Ernest M. Curtis, St Louis Clarence W. W. Smith, Chicago *John J. Dobson, Jr., Kansas City I n d ia n a Paul F. Memhardt, St Louis †Donald H. Borger, Fort Wayne Carroll C. Shelton, St. Louis *Abraham A. Borts, Indianapolis N eb ra sk a *Joseph L. Bubul, Indianapolis *Albert J. Keiser, Omaha †Geoffrey L. Carmichael, Bloomington *Terry H. Milby, South Bend N e w J ersey Norman Cogliati, Newark I ow a Loren R. Gardner, Newark George A. Stephenson, Ottumwa *Cornelius A. McAloon, Bound Brook

K a n s a s N e w Y ork Harry Faris, Hutchinson *Bernard Abramson, New York *John Q. Adamson, New York K e n t u c k y Wallace Blakey, New York Harry Welenken, Louisville Franklin M. Boller, New York *Harry A. Clarke, New York * Admitted as associates. *Joseph H. Cohen, New York † Advanced to membership. †William A. Davies, New York The Certified Public Accountant 15

*David S. Deutsch, New York W is c o n s in William E. Downey, New York *Edward C. Jordan, Green Bay John Ehling, New York *Arthur G. Kiesling, Madison Frank E. Field, New York *C. B. McCue, Milwaukee *Herman J. Fishman, New York Eugene P. Hagan, New York Harold U. Johnson, New York Members of the Institute in Jack Judelson, Middletown War Activities *James F. Leach, New York Morris L. Machtiger, New York Kenneth M. Huddleson, Silver Springs, *John C. Meyers, New York Md.—Ensign, USNR. David Miller, New York Henry J. Lee, Providence, R. I.—Major, Morris Ratner, New York Abraham Rosen, New York Finance Department, U. S. Army. Michael N. Stoler, New York Quentin E. Peterson, Chicago, Ill.— *Samuel Telchin, New York S/Sgt. U. S. Army. Perrin J. Tupper, Syracuse Paul B. Weidmann, New York Oran Sarrels, Tucson, Arizona—USNR. Abraham H. Weinbaum, New York Sidney Steinberg, Philadelphia, Pa.—Pri­ Paul A. Winans, Syracuse vate, U. S. Army. *Louis E. Zraick, New York N orth C a r o lin a New State Board Personnel *Joseph H. Ward Raleigh Claude K. Milligan of Jacksonville has O k l a h o m a been appointed a member of the Florida *Speed A. Elliott, Jr., Oklahoma City State Board of Accountancy to succeed *Charles J. Green, Tulsa D. A. Smith of Jacksonville whose term O regon recently expired. *Jay R. Wilson, Portland

P ennsylvania *Walter P. Haun, Philadelphia William A. Johnson, Philadelphia James A. Councilor, of Washington, *James W. Kindelan, Pittsburgh D. C., died on February 13th at the age *Elmer J. Lindinger, Wyncote of 60. He was senior partner in the firm *William A. Schan, Pittsburgh of James A. Councilor & Company. Mr. Harry C Schmidt, Philadelphia *Charles S. Strickler, Philadelphia Councilor was a CPA of Virginia, New *William J. Tobin, Jr., Philadelphia York, District of Columbia, and North Lester Wichterman, Philadelphia Carolina and had been a member of the

T e n n e s s e e American Institute of Accountants since *Robert S. Carney, Memphis 1922. He served on the council of the *Ronald C. Cox, Memphis Institute from 1943 until his death, and *James L. Forester, Memphis on the Institute’s committees on federal T e x a s taxation and federal corporation law. He *Thomas H. Cherry, San Angelo was a former president of the American *Preston W. Cox, Wichita Falls Society of Certified Public Accountants E. H. Linsteader, Dallas and of the District of Columbia Institute *James R. Moore, Dallas Eugene R. Sedgewick, San Angelo of Certified Public Accountants. †Fladger F. Tannery, Austin Henry Davis of Honolulu, Hawaii, died Stanley M. Trevathan, Wichita Falls October 5, 1944, at the age of 91, the In­ Herbert W. Vogan, Houston stitute has just learned. Mr. Davis was V ir g in ia manager of the firm of Henry Davis Au­ *Nathan S. Richardson, Bristol dit Co. He was a CPA of the Territory William H. Westphal, Richmond of Hawaii and had been a member of the W a s h in g t o n American Institute of Accountants since *R. Allan Bennett, Tacoma 1925. *Karl F. Hesse, Seattle Orbin B. Keplinger, Seattle 16 The Certified Public Accountant

accounting manual. New York, Joint Institute Library Army-Navy Termination Regulation Distribution Office, Nov. 1, 1944. The following current government pub­ Loose-leaf. lications are available for use at the In­ stitute library, or for circulation to In­ H e l e n M. J o h n s t o n e , stitute members: Librarian United States. Senate. Preparing small business for postwar; report of the Special committee to study problems of American small business, United Termination Cost States Senate, Seventy-eighth Congress Memorandums second session . . . July 14, 1944. Washington, D. C., Government print­ To clarify and assure greater uni­ ing office, 1944, 27 pp. (Senate com­ formity in accounting practices in­ mittee print no. 5.) volved in contract settlements, the United States. Senate. Small business Director of Contract Settlement is­ problems; buyer’s guide for surplus sued late in February, Regulation property compiled at the request of 14, relating to termination cost mem­ Surplus war property subcommittee of orandums. These memorandums are the Special committee to study prob­ intended to assist contractors, sub­ lems of American small business, contractors, and contracting agencies in interpreting the Statement of United States Senate, Nov. 2, 1944. Washington, D. C., Government print­ Principles for Determination of Costs ing office, 1944. 26 pp. (Senate com­ upon Termination of Government mittee print no. 19.) Fixed-Price Supply Contracts, sub­ mitted by the Director of Contract United States. Smaller War Plants Cor­ Settlement last October in Regula­ poration. Loans to small business. tion 5. Washington, D. C., Government print­ Regulation 14 is accompanied by ing office, no date. 15 pp. termination cost memorandums 1 to United States. War Contracts Price Ad­ 8, inclusive, referring respectively to justment Board. Renegotiation regula­ the following subjects: 1. recog­ tions for fiscal years ending after June nized commercial accounting prac­ 30, 1943. Washington, D. C., Govern­ tices; 2. general, administrative, and ment printing office, 1944. Loose-leaf. distribution expenses; 3. common United States. War Department. Ad­ items; 4. partners’ and sole propri­ ministrative audit procedures for cost- etors’ salaries; 5. application of the plus - a - fixed - fee supply contracts. limitation of subparagraph 1 (i) of Washington, D. C., War Department, the Statement of Cost Principles; 6, March 1, 1944. (War Department tech­ materials acquired prior to date of nical manual TM 14-1000.) contract; 7. initial costs; 8. rejects. United States. War Department. Ter­ It is expected that additional ter­ mination accounting manual for fixed- mination cost memorandums will be price-supply contracts. Washington, issued by the Director of Contract D. C., Government printing office, June Settlement, as occasion demands. The 1, 1944. 54 pp. (W ar Department full text of Regulation 14 and the technical manual TM 14-1005.) first eight cost memorandums will be United States. War Department and published in the April issue of The Navy Department. Joint termination Journal of Accountancy. regulation, including joint termination THE CERTIFIE DPUBLIC ACCOUNTANT A Bulletin of The American Institute of Accountants

V ol. 25 A pril, 1945 No. 4

Form 42-A (Special-Revised) direct with Secretary’s Notes the draft board without certification by any war agency. It should be assumed that S ele c t iv e S ervice such deferment would be granted only in Reports indicate that the new certifica­ exceptional cases in which the individual tion procedure applicable to Selective registrant was clearly making so great a Service registrants under 30 years of age, contribution to essential activities that his which was described in the March issue induction would impair the war effort. of this bulletin, has not proved to be generally practicable in the case of public accountants. The theory behind this pro­ cedure is that the proper source of certifi­ CPA Examination Schedule cation is the war agency whose con­ tribution to the war effort would be im­ State accounting boards adopting paired by the induction of a registrant the uniform examinations prepared under 30 who is necessary to an essential by the American Institute of Ac­ activity. In the case of public accountants, countants will hold the regular spring this appears to mean that certification is examinations on May 16, 17, and 18, available only through war agencies to 1945, according to the following which clients of the public accountant schedule: concerned are contributing material or Wednesday, May 16th: 1:30 to services. In effect, therefore, an account­ 6:00 P.M. — Accounting Practice, ant must procure a double certification, Part I. first through a client engaged in an es­ sential activity, and then through the war Thursday, May 17th: 9:00 A.M. to agency with which that client deals. Since 12:30 P.M.—Theory of Accounts. most public accountants serve more than one essential client, each of whom may Thursday, May 17th: 1:30 to be dealing with a different war agency, 6:00 P.M. — Accounting Practice, difficult questions of jurisdiction arise. Part II. It should be borne in mind that Selec­ Friday, May 18th: 9:00 A.M. to tive Service local boards retain the final 12:30 P.M. — Commercial Law. authority in occupational deferments and it has been reported that, in a few cases, Friday, May 18th: 1:30 to 5 :00 deferment of employees of public account­ P.M. — Auditing. ants under 30 has been obtained by filing

PUBLISHED BY AMERICAN INSTITUTE PUBLISHING CO., INC. 13 East 41st Street, New York 17, N. Y. 2 The Certified Public Accountant

It should be emphasized that the certifi­ General Accounting Office be authorized cation procedure applies only to regis­ to employ not more than ten persons with­ trants under 30. Employees of public out regard to civil service, for the purpose accountants ages 30 through 33 may be of conducting the audit of all government considered for occupational classification corporations as required by the George if necessary to and regularly engaged in bill (See April, 1945, issue of The an essential activity; and those ages 34 Journal of Accountancy, page 266), was through 37 if regularly engaged in an amended as passed by the Senate, to au­ essential activity. thorize the Comptroller General also “to employ by contract . . . professional serv­ W a g e s a n d H o u r s ices of firms and organizations for tem­ Officials of the Wage and Hour Divis­ porary periods or other special purposes.” ion in three cities have alleged that staff George P. Ellis, chairman of the In­ accountants employed by public account­ stitute’s committee on governmental ac­ ants at salaries of $200 a month or more counting, conferred at some length with may not be exempt from the provisions of the Comptroller General and his associates the Fair Labor Standards Act, if their in Washington late in March, and the work is routine in character or is per­ cooperation of the Institute was requested formed under such close supervision that in securing qualified certified public ac­ it does not come within the definition of countants to head up a new department “professional” employee promulgated by in the General Accounting Office, to con­ the Administrator. Representatives of the duct the new type of audits of government Institute have conferred with Wage and corporations “in accordance with princi­ Hour officials on this question and have ples and procedures applicable to com­ argued that all staff accountants employed mercial corporate transactions.” Accord­ by public accountants should be consid­ ingly, the secretary of the Institute on ered “professional” under the definition, April 2nd, telegraphed state society presi­ regardless of the $200 delimitation, as dents and members of council of the In­ contended in a brief filed by the Institute stitute, seeking recommendations of indi­ with the Administrator in 1940. (See viduals qualified for this work. January, 1941, issue of The Journal of In the field of surplus-property dis­ Accountancy, pages 63-68.) It seems to posal, the Chief Auditor of the Recon­ the Institute highly important that recog­ struction Finance Corporation advised nition of the professional status of public the Institute that the policy had been accounting be maintained in all govern­ adopted of engaging independent public ment agencies with which the profession accountants regularly retained by contrac­ must deal. The matter is now before the tors who would serve as outlets for sur­ Institute’s executive committee and will plus property, to make necessary audits of doubtless be the subject of further con­ such contractors required by the Defense ferences with Wage and Hour officials. Supplies Corporation. The proviso was State society officers and Institute mem­ added, however, that the DSC must be bers are requested to advise the Institute satisfied as to the qualifications and inde­ if Wage and Hour officials question the pendence of the accountants regularly re­ exemption of staff accountants in their tained by such contractors. localities. RFC subsidiaries have previously en­ gaged accounting firms regularly retained G o v e r n m e n t A u d it s by contractors operating war plants to Two very interesting developments in audit the accounts of such contractors on government practice in the field of audit­ behalf of RFC. In the field of surplus- ing occurred last month. The first de­ property disposal, it is possible that hun­ ficiency appropriation bill, 1945, which as dreds of contractors may be utilized. The passed by the House, provided that the advantages and economies of utilizing in­ The Certified Public Accountant 3 dependent professional accountants fa­ miliar with the contractors’ affairs, instead Accounting Systems for of attempting to build up huge auditing Veterans in Business staffs within the government agencies, are obvious, and the RFC is to be commended What records or accounting sys­ for following this course. The Navy De­ tems can be secured by the returned partment and the Office of Contract Set­ veteran who starts his own business ? tlement have to a limited extent followed What tax and managerial data is similar procedures. most needed by the proprietor who, with few employees or none, operates A c c o u n t in g R e s e a r c h a small business? In what form can B u l l e t i n s D is c u s s e d an ex-serviceman who is not trained A stimulating discussion of Accounting in accounting most conveniently keep Research Bulletins No. 23 and No. 24 the financial records necessary for took place at a meeting of the New Jersey the profitable operation of his busi­ Society of Certified Public Accountants ness? on March 27th. The principal speakers These questions, addressed to the were Walter A. Staub, William H. Bell, Institute by veterans, associations of William D. Cranstoun, and Maurice E. bank credit men, and others, are the Peloubet, all of whom were members of basis of a current survey by the re­ the Institute’s committee on accounting search department of the systems and procedure which issued these two bulle­ records which have been designed for tins. The first two concurred in Bulletin small businesses. Information from No. 23 and the latter two were among the Institute members relative to publish­ three dissenters. The question was raised ers or other distributors of such in the discussion as to how much authority record forms would be welcomed by the Institute research bulletins have. It the research department. was brought out that until they have been formally adopted by the membership of the Institute, the authority of the bulletins rests upon the general acceptability of the P r a c t ic e i n F o r e ig n C o u n t r ie s opinions reached by the committee on It has been reported indirectly that regu­ accounting procedure; that none of the lations interpreting the recent Cuban law bulletins has as yet been submitted for applicable to the practice of accounting approval of the membership of the Insti­ have been drafted by the Cuban Ministry tute; that nevertheless most of the com­ of Labor in a form satisfactory to foreign mittee’s recommendations have been accountants, but at this writing had not widely adopted in practice; that practi­ yet been approved by the Cuban govern­ tioners who depart from the recommended ment (see T h e C e r t if ie d P u b l ic A c ­ procedures may be called upon to justify c o u n t a n t for January, and February, their position; that the committee may 1945). supplement or modify its recommendations The Bureau of Foreign and Domestic as circumstances appear to require, as has Commerce of the United States Depart­ already been done in two instances. ment of Commerce, at the Institute’s re­ The secretary of the Institute in a brief quest, is collecting information relative statement emphasized that the funda­ to the practice of accounting in Latin mental purpose of the Institute’s research American countries. Reports have been program was to maintain the leadership received to date relating to the following of the accounting profession in the formu­ countries: Bolivia, Brazil, Chile, Colom­ lation of accounting principles, and that bia, Dominican Republic, Ecuador, El this objective should be kept in mind in Salvador, Guatemala, Haiti, Honduras, all discussions of details and procedures. Nicaragua, Panama, Peru, Uruguay, and 4 The Certified Public Accountant

Venezuela. These data are available to Otherwise, attendance may have to be re­ members of the Institute, on request. stricted or if there are further unfavorable developments, the meeting might have to A c c o u n t in g i n L a b o r -M a n a g e m e n t be canceled. N egotiations The secretary of the Institute heard a T r e a s u r e r S p e a k s very interesting address by Harold J. Maurice E. Peloubet, treasurer of the Ruttenberg, Research Director of the Institute, conducted a panel discussion on United Steel Workers of America, at a “What to Look for When Auditing Fixed meeting of the New York Chapter, and Current Liabilities” at a meeting of NACA, March 26th. It appears that ac­ New York State Society of Certified Pub­ counting data are important in wage ne­ lic Accountants on March 19th. gotiations, but that the ordinary published financial reports of companies are con­ M e m b e r s h ip sidered useless by the unions for this pur­ The activity of the membership com­ pose. Their general approach is to obtain mittee has been accelerated since the cost data which will show net gains in passage of the Ides of March. Reports productivity through lower costs. They from 31 members of the committee on the contend that labor is entitled to a fair status of 362 certified public accountants share of the gains. Adequate accounting have been received. Since the program data are not generally available now, and was inaugurated the middle of January, a crude estimates often have to serve as a total of 62 applications have been received basis for negotiations. from members of the committee, 30 of them The committee on technical sessions during the month of M arch: 3 each from plans to arrange a round-table discussion Dallas and Chicago; 2 each from Fort on this subject at the annual meeting of Worth, Raleigh, Pittsburgh, Salt Lake the Institute next October. City, and Philadelphia; 1 each from Cin­ cinnati, Atlanta, Richmond, Des Moines, C o u n c i l a n d A n n u a l Shreveport, Indianapolis, Marion, Ind., M e e t in g s Jacksonville, Washington, D. C., Linden, The council of the Institute will meet at N. J., Springfield, Ill., Miami, Boston, and the Waldorf-Astoria Hotel in New York, Madison, Wis. May 1st and 2nd. Out-of-town attendance The staff has sent copies of the descrip­ will be limited to 50 individuals. This pre­ tive pamphlet outlining the activities of cludes the usual invitations to all state the Institute, a copy of which was sent to society presidents, but the chairman of all members of the Institute with the the Advisory Council of State Society March issue of this bulletin, to approxi­ Presidents will attend, as well as several mately 1700 accountants who have ob­ chairmen of important administrative and tained their CPA certificates since 1943. war committees. As a result, numerous requests for appli­ A program for the annual meeting has cation forms are being received from been outlined by the committee on techni­ newer CPA certificate holders. cal sessions consisting of Mark E. Rich­ A total of 75 new members and associ­ ardson, chairman, John B. Inglis, and H. ates were admitted to the Institute in T. McAnly. A meeting of the committee March, and 6 associates were advanced to was held in New York, March 28th. membership. Total number of members Plans for this meeting, which is sched­ and associates, as this bulletin goes to uled for the Palmer House, Chicago, press, is 8,600. October 22nd-25th, are tentative. It is ex­ The thanks of the Institute are due to pected that an early conclusion of the war the Michigan Association of Certified in Europe would mean some modification Public Accountants for its cooperation in of the convention rules by next fall. devoting space in its 1944-45 Roster of The Certified Public Accountant 5

Members to an outline of requirements will be distributed to servicemen interested for membership in the American Institute in accounting. The American Institute of Accountants. This is another indica­ of Accountants has been asked to cooper­ tion of the trend toward coordination of ate in the revision. Information concern­ activities of the state societies and the ing the various AFI courses in ac­ national organization. counting on both high school and college levels has been secured by the American D ir e c t o r y L is t i n g s Institute for the purpose of answering Another state society has been added to inquiries from veterans. Lt. Col. Carl W. the list of those which have ruled that Hansen, Commandant of the Armed listings of certified public accountants in Forces Institute, has expressed the opin­ bold or block type in telephone directories ion that the American Institute’s refresher are not in accordance with the rules of course for returning veterans, who have professional conduct of certified public had previous experience in public account­ accountants. At a meeting of the Rhode ing practice, constitutes a worth-while Island Society of Certified Public Ac­ project. countants, February 20, 1945, the follow­ ing resolution was adopted: A m e r ic a n I n s t it u t e R e f r e s h e r C o u r s e “Resolved, that listings of certified pub­ Publication of the Institute’s refresher lic accountants in telephone directories course is tentatively set for June. Since should be made in plain type in accordance the content of the course was announced with the Society’s policy on advertising, in the January issue of T h e C e r t if ie d and that the use of either bold or block P u b l ic A c c o u n t a n t , arrangements have type should be discontinued, and that a been made for the following additional notice of this resolution should be mailed chapters: to each member of the Society.” J. L. C. “Price Administration,” by Paul M. Green “Consolidated Statements,” Educational Department by Percival F. Brundage “Professional Ethics,” E d u c a t io n a l O pportunities fo r by John L. Carey V e t e r a n s Plans for chapters on auditing proce­ Letters have been written to collegiate dure have been revised. The three pro­ schools of business, requesting informa­ posed chapters on “New Auditing Tech­ tion concerning plans for returning vet­ niques,” “Audit Programs and Question­ erans interested in accounting with par­ naires,” and “Audit Working Papers,” ticular reference to (1) counseling will be presented in two chapters—one service, (2) tests to determine eligibility on “New Auditing Techniques” and one of veterans for accounting courses, (3) on “Audit Programs and Working Pa­ refresher courses, (4) special curricula pers.” Both will be written by Maurice for veterans interested solely in account­ E. Peloubet. ing and allied subjects, (5) policy in When completed copies of the refresher granting credit for courses taken by vet­ course are available, announcements will erans with the Armed Forces Institute or appear in The Journal of Accountancy, for experience in accounting work while T h e C e r t if ie d P u b l ic A c c o u n t a n t , in service. The attention of the schools and in the public press. was called to the American Institute’s re­ The interest of veterans in the refresher fresher course in public accounting. course is clearly indicated in the first re­ The Armed Forces Institute is revising plies received by the New York State So­ a brief, “Preparing to Become a Certified ciety of Certified Public Accountants, in Public Accountant.” The revised brief response to a letter from President Henry 6 The Certified Public Accountant

A. Horne. In 37 out of 41 replies vet­ each applicant and the board requires erans expressed interest in a refresher letters of recommendation from these course covering such subjects as changes references and from employers. It is also in accounting and auditing, federal and the policy to verify the certificate status state taxation, and government relations and state society membership of each with business. Several of the letters made applicant. It takes approximately sixty the suggestion that the course might be days to process an application when helpful to servicemen now, before their favorable reports are received promptly, discharge. and a much longer period when refer­ The majority of replies expressed ences or employers fail to reply, or the desire of veterans for the cooperation submit unfavorable reports. of the New York State Society in helping them obtain their old or new jobs in Regulatory A ccounting B ill public accounting. A few other points of A meeting of the committee on state interest are found in these letters. Vet­ legislation was held in Chicago, April erans who do not have CPA certificates 6th, for the purpose of reviewing the are very much concerned over experience draft of the Institute’s regulatory ac­ requirements for certificates, and are counting act. Those present at the asking what the policy of state boards Chicago meeting included T. Dwight will be in passing on their experience. Williams, chairman, and the following Veterans also express the need for advice members of the committee: Sam W. on accounting courses, accounting texts, Eskew, Lyle W. Hines, Roland B. Keays, and other publications which would be Ralph B. Mayo, Aubrey E. Swanson; also most helpful to them in returning to Spencer Gordon, counsel for the Institute; public accounting work. The refresher the secretary, and the educational direc­ course will include bibliographies which tor of the Institute. should assist in meeting this need. E l i j a h W a t t S e l l s A w a r d s B o a rd o f E x a m i n e r s The board of examiners selected the The board of examiners met at the following candidates to receive the Elijah Institute offices in New York on Mon­ Watt Sells awards for papers submitted day, March 19th, with all members in the November, 1944, examination: present. The board reviewed reports on Gold Medal— the November, 1944, examination and ap­ Norman G. Currin, Detroit, Mich. proved a final draft of the May, 1945, Silver Medal— Francis John Weitekamp, Chicago, Ill. examination. It selected the winners of Honorable Mention— the Elijah Watt Sells Scholarship William Harris Shinn, Dallas, Tex. awards in the November, 1944, examina­ Robert S. Turner, Dallas, Tex. tion whose names appear below. Raymond E. Lang, Chicago, Ill. In setting dates for future examina­ Winners of the awards received the tions, there was a discussion of the advis­ highest grades among 1920 candidates ability of scheduling them on November who took these examinations which were 11th, a legal holiday in some states. conducted, with the Coöperation of the State boards of public accountancy are American Institute of Accountants, by invited to inform the board of examiners boards of accountancy in forty-one states, as to whether or not this is an objec­ the District of Columbia, the Territory tionable date. of Hawaii, and by the Treasury. The board reviewed and passed on The awards will be presented at the pending membership applications for next annual meeting of the Institute if which the files of reference data were the winners can attend. complete. Two references who are mem­ T h o m a s W . L e l a n d , bers of the Institute must be named by Educational Director. The Certified Public Accountant 7

procedure, and cooperation with the SEC, Research Department relative to a proposed form S-12 (for the registration of companies in a pro­ motional or development stage) were pre­ C o m m it t e e M e e t i n g sented in a statement by the chairman of The committee on accounting procedure the committee on auditing procedure to has scheduled its next meeting for May Baldwin B. Bane, director of the cor­ 15th and 16th. A two-day session is poration finance division of the SEC. planned to permit more extensive consid­ P hiladelphia M e e t i n g eration of the subjects on the agenda. The Philadelphia Chapter of the Penn­ A c c o u n t in g f o r W a r C o n t r a c t s sylvania Institute is sponsoring a meet­ Accounting Research Bulletin No. 25, ing, to be held April 23rd, at which “Accounting for Terminated War Con­ George D. Bailey, chairman, John H. tracts,” has been unanimously approved by Zebley, Jr., a member of the committee the committee on accounting procedure. on accounting procedure, and the direc­ tor of research will discuss the activities A c c o u n t a n t ’s R esponsibilities of that committee — its objectives and manner of operation, its accomplishments, A draft of a statement on “The Ac­ and its subjects for future consideration. countant’s Responsibility on Security Registrations” has been approved by a A n n u a l R e p o r t s subcommittee and submitted to the com­ The committee on terminology and the mittee on auditing procedure for ballot. subcommittee on surplus are interested in the action of the Caterpillar Tractor Q u a s i -reorganization Company as reflected in its 1945 annual A brief statement was submitted to the report. The company has abolished the subcommittee on quasi-reorganization to term “surplus” in all its uses. Contribu­ serve as an introduction to its review of tions as capital have been merged into accounting principles and procedures in a single account, “Capital Stock—Com­ the areas of cost and value and quasi­ mon,” and the term “Profit Retained in reorganization. The statement suggests the Business” has been adopted to describe that the questions warranting considera­ what was previously designated as earned tion by the subcommittee include the fol­ surplus. lowing: (a) Is the cost principle of A note to the financial statements of the accounting for assets the only significant American Bakeries Company explains a and useful basis of asset valuation and method of determining the amount of reporting? (b) Should the usefulness of compensation given by means of stock recorded-asset valuations be judged in options which has been approved in draft relation to the use of the data for the statements considered by the subcommit­ purposes of balance-sheet or income- tee on stock options. The footnote states: statement reporting? (c) To what extent “The operating expenses for the year may exceptions to a cost valuation of include $6,600 with respect to 300 shares assets, as recognized by the procedures of Class ‘B’ stock (since changed into of recording a quasi-reorganization, be capital stock) of the company issued to extended to other situations in the an officer as additional compensation un­ broader field of capital readjustment or der an option agreement entered into in corporate reconstruction ? 1936 and modified in 1940. The amount of such additional compensation has been P r o po se d F o r m S-12 computed at $22 per share, being the difference between the market value of Comments of members of the commit­ such stock at the date the option agree­ tees on accounting procedure, auditing ment was entered into and the amount 8 The Certified Public Accountant of $5 per share received for the stock in the case of depreciation. Both amorti­ by the company. The market value of zation and depreciation are based on the the stock at the date (January 24, 1944) cost of the facility to the accounting the option was exercised aggregated owner. . . . The principle that should be $20,400, resulting in an excess of market followed in every case is to spread sys­ value over amount received of $18,900. tematically the amount by which the cost “At December 30, 1944, there were of the asset exceeds its estimated disposal 3,000 shares of capital stock under op­ value at the end of its anticipated useful­ tion to an officer at $2.50 per share.” ness to its present owner over that period of usefulness. If such a procedure should “A c c e p t e d A c c o u n t in g P r a c t ic e ” result in the same amount as that allowed Paul M. Green, deputy administrator as a deduction for tax purposes under section 124 of the Internal Revenue Code for accounting of the OPA, requested ex­ it would be purely accidental.” Deprecia­ pressions of opinion upon the “accepted tion on Replacement Cost: “Accounting accounting practice” in regard to percent­ rests basically upon costs and their proper age depletion, five-year amortization of allocation to the income of the fiscal emergency facilities, and depreciation on periods to which they relate. . . . It is not replacement cost. The opinions were considered good business practice to write sought in connection with hearings on the properties up and down with fluctuations extension of the Emergency Price Con­ in their market value or in their cost of re­ production. To do so would result in such trol Act and in particular reference to a an absence of objective measurements and proposed amendment to the Act which such fluctuations of charges for deprecia­ would require the OPA to recognize all tion that the financial statements would be federal income-tax deductions as ele­ of little value. . . . It is only in unusual ments of cost when the company, firm, or and extraordinary cases, such as a perma­ individual so desired. nent, material change in the general price In a reply to Mr. Green, the director of level, a reorganization or a quasi-reorgani­ research expressed these personal views: zation, that recognition may be given on a company’s books to the current value of Depletion: “Depletion is the physical its assets. . . . In case the asset has mate­ reduction of a supply of a natural re­ rially increased in value since its acquisi­ source. Depletion of oil, gas, coal, and tion, it is generally recognized that the other minerals takes place by the removal owner has an advantage in costs over his of a part of a natural deposit through competitors who had to acquire identical the extraction operation. The proportion facilities at higher costs. It is not con­ of the cost of the whole which is allocable sidered good practice to adjust the costs to the part that is removed in a given in such cases to equal those of the com­ period is the amount of actual depletion petitor since the costs are actually cost of production for that period. . . . different.” Under no circumstances does it seem to The request for these opinions on ac­ me to be proper accounting to treat as counting principles specified that the ‘cost’ any depletion figure determined on views should be confined entirely to the the basis of an arbitrary percentage of sales value or income which is not calcu­ accounting problems as distinct from the lated to determine the portion of actual price, rent, or other operating program of cost or discovery value attributable to the OPA and the reply stated that ex­ the output of the period.” Special pression of opinion was directed only to Amortization: “Amortization under a the accepted accounting practices in cost Certificate of Necessity is a special determination. No opinion as to the pric­ method of calculating a statutory tax ing policies of Congress or the OPA or deduction whereby the cost of a facility factors that should be taken into consid­ for which a Certificate of Necessity has been issued is deducted from income over eration in the fixing of prices was stated. a period of five years regardless of its expected productive life which is the Carman G. Blough, period over which the cost is deducted Director of Research. The Certified Public Accountant 9

for the duration, a substitute for the Public Information Department conferences has been arranged in the form of a “flying trip” of officers and other representatives of the Institute to N e w s o f t h e M o n t h address state society wartime accounting Federal taxation, needed improvement conferences. The 1945 series will be held in the accounting system of federal gov­ late in May and early in June. Samuel ernment, and aid to returning veterans J. Broad, president; Edward B. Wilcox, were three topics in the news of March vice-president; Maurice Austin, chairman which called for special work by the pub­ of the committee on federal taxation; lic information department. Carman G. Blough, director of research; The American Institute’s support of and John L. Carey, will take to the road. tax simplification, including the back­ They will address state society or chapter ground of House Joint Resolution 109 wartime accounting conferences in Bos­ (the Carlson bill), was explained orally ton, New Haven, Buffalo, Cleveland, to one of the associate editors of the Detroit, Louisville, Indianapolis, and Saturday Evening Post. Richmond. In the course of the interview, there News abstracts of the conference ad­ was discussion of problems of the pro­ dresses of the members of the speakers’ fessions in helping their members return­ party will be released to the newspapers ing from the wars, and also the present and press associations. Effort will be inefficient accounting system of the fed­ made to arrange radio broadcasts by the eral government. The editor showed in­ Institute president en route. In eight of terest in an editorial in The Journal of fourteen cities holding conferences in the Accountancy entitled “Should Profes­ past two years, presidents of the Institute sional Requirements Be Lowered for took part in radio broadcasts. Veterans ?” and editorials on federal government accounting, and tax simpli­ Contract T ermination Conferences fication. D esire of state society groups to spon­ sor war-contract termination conferences N a t u r a l B u s i n e s s Y e a r brought two sudden calls. In response, New life came in March to the activ­ April conferences were arranged for ities of the Institute in relation to promo­ New Orleans and Memphis. Commander tion of the natural business year. William J. S. Seidman will be a speaker at both. J. Carter, chairman of the committee on Releases were prepared for the news­ natural business year, reported an inter­ papers and press association bureaus in view with an official of the Bureau of both cities. These meetings increased Internal Revenue on the possibility of to fourteen the number of conferences new legislation sponsored by the Treasury so far initiated by the Institute in co­ Department, which would remove tax ad­ operation with the Army and Navy, and vantages from changes to natural busi­ state societies. ness years. With such legislation fiscal years might be left to the free choice of S p e a k e r s ’ B u r e a u taxpayers without recourse to the Bureau Operation of the American Institute for permission to change. The executive speakers’ bureau continued in March to committee regarded this proposal as ap­ be an active phase of the public informa­ propriate. tion program. Arrangements were made for addresses by Vice-President Wilcox W a r t im e A c c o u n t in g C o n f e r e n c e s before the Kansas City Chapter of the Since the decision was reached to sus­ Missouri Society on April 26th; Paul D. pend the regional accounting conferences Seghers, immediate past member of the of the state societies and the Institute committee on federal taxation of the In­ 10 The Certified Public Accountant stitute, before an insurance conference rents” section of the NACA Bulletin. Dr. of the American Management Asso­ Atkinson, vice-president of NACA’s ciation on March 21st; and by Carman G. Philadelphia Chapter, is currently en­ Blough, research director, before the gaged in public accounting practice. Maryland Association of Certified Public Theodore Lang, professor of accounting Accountants on June 12th. at New York University, becomes a re­ search associate. Professor Lang is an R e l e a se s author or editor of several standard ac­ The department distributed to the press, counting texts, assistant program director and to officers of government and na­ of NACA’s New York Chapter, and a tional groups, the text of a resolution member of the American Institute of Ac­ adopted March 9th by the executive countants. Dr. Clarence W. Fackler, pro­ committee of the American Institute urg­ fessor of accounting at New York ing immediate discussion by Congress University, joins the staff as a research of House Joint Resolution 109, introduced associate. He is a certified public ac­ by Mr. Carlson, and copies of the new countant of Illinois and has practiced American Institute Yearbook. Also on public accounting. the list for March were model releases designed to help state society presidents announce to their state press the names Tax Practice by Nonregistered of their committees on cooperation with Accountants Under Missouri Law veterans, and individual news shorts an­ nouncing elections of new Institute mem­ The Missouri State Board of Account­ bers and associates to their home-town ancy has received a requested opinion newspapers. from the Attorney General of Missouri concerning its jurisdiction over non­ R e q u e s t licensed accountants who perform tax Members are requested to send to Amer­ services for the public for compensation. ican Institute headquarters clippings of The opinion involves an- interpretation any news or editorial references to the of the definition of practice as a public accounting profession which they may accountant within the meaning and intent find in their local newspapers. of the Missouri Act. This definition in­ This cooperation will help in keeping cludes the preparation or certification, records of the results of the release to the for clients, of statements or reports which press of information about the profession “are to be filed with a court of law or and the Institute. with any other governmental agency.” The Attorney General applied the rule F r a n k A. G a l e , Assistant Secretary. of statutory construction that when gen­ eral words in a statute follow particular words, the general words will be consid­ NACA Expands Activities ered as applicable only to persons or things of the same character as indicated The National Association of Cost Ac­ by the specific words, and cannot include countants recently announced the expan­ wholly different things. He held, there­ sion of its research and publication activ­ fore, that the reference to “any other ities and appointment of three part-time governmental agency” means such agen­ members of the headquarters staff. Dr. cies comparable to courts of law. He Sterling K. Atkinson, professor of ac­ ruled specifically that the act does not counting and Head of the Accounting prevent persons not registered as public Department at Temple University, be­ accountants or certified public accountants comes an editorial associate and will from preparing state and federal income- assume responsibility for the “Cost Cur­ tax returns. The Certified Public Accountant 11

of bonds issued in connection with the Tax Department purchase of public utilities (such as elec­ tric and power companies) by states or municipalities. The purpose of the bill is Several recent tax bills of interest have to prevent tax evasion through the sale been noted by the committee on federal of utility plants to states and cities. The taxation. Treasury, it is believed, will regard this measure with approval as a stepping-stone D eductibility of I n t a n g ib l e D r il l in g for renewing the campaign to end exemp­ C osts a s O r d in a r y E x p e n s e s tions on all state and municipal security issues. The recent decision in the Port of Two similar bills, HR 2825 (Reed) and New York Authority case put this cam­ HR 2796 (Carlson) have been introduced paign to a temporary standstill. to give the taxpayer the option to charge intangible drilling costs to ordinary ex­ penses or to the capital account. These I n c r e a s e i n S p e c if ic E x c e s s -P r o f it s bills are designed to overcome the de­ T a x E x e m p t io n a n d O t h e r T a x cision in the case of F. H. E. Oil Com­ R e d u c t io n s pany v. Commissioner, CCA 5th Circuit Two bills, HR 2548 (Coffee) and HR Court, decided March 6, 1945, which re­ 2801 (Reed) have been introduced to in­ versed a Treasury regulation of over 25 crease the specific excess-profits tax ex­ years’ standing giving oil companies this emption from the present $10,000 to option. The decision held the income-tax $25,000 and $30,000, respectively, after regulation as illegal because the statute the defeat of Germany. Rep. Reed’s bill provides for recovery through depletion further provides that the excess-profits and forbids the deductions as ordinary tax rate be reduced to 60 per cent after expenses. V-E Day and repealed outright after the In the meantime, Rep. Carlson in an defeat of Japan. A horizontal cut of 20 address before the House of Representa­ per cent in individual tax rates is also tives on April 1st, advised that Joseph D. provided for in the Reed bill, to take ef­ Nunan, Commissioner of Internal Rev­ fect at the end of the war with Japan. enue, has stated in a letter to be made These measures correspond, in fact, to public, dated March 29th, to Wesley E. recommendation No. 1 of the committee Disney, former representative from Okla­ on federal taxation’s Postwar Taxation homa and former member of the Ways Recommendations (published in the No­ and Means Committee, that, notwithstand­ vember, 1944, issue of The Journal of ing the decision in the case of F. H. E. Accountancy) which proposes that ex­ Oil Company, the Bureau of Internal cess-profits tax rates be reduced to a Revenue proposes to continue to follow maximum of 60 per cent without postwar the provisions of section 29.23(m )-16 of refund, and the exemption increased to Regulation 111 which permits the optional $20,000 or $25,000 with the first impor­ charging of the intangible drilling costs tant cutback in government war expendi­ of oil and gas wells. Mr. Nunan further tures, probably following the cessation of stated that in the event of a clarification active European hostilities. Complete re­ of the law impelling a change, the change peal of the excess-profits tax is recom­ would not be retroactive unless so di­ mended as soon as possible after cessation rected by Congress. of all active hostilities and, in any event, no later than the end of the second year T a x a b il it y of C e r t a in S t a t e a n d after that event. The committee pointed M u n i c i p a l B o n d s out in its report that reduction in wartime HR 2014 (Carlson) provides for the expenditures and war-production profits elimination of the tax-exemption privilege justify the intermediate reduction, while 12 The Certified Public Accountant

continued war-production profits and con­ reconcile differences of opinion among tinued need for revenue, both on a re­ such groups to the full extent possible, so duced scale, justify temporary continu­ that a wide area of agreement among ance on a reduced basis. organizations active in the field of taxa­ tion may serve as a basis for postwar tax recommendations to Congress. C a p it a l G a i n s T a x P r o po sals

Recent anti-inflation tax-control pro­ N o n p a r t is a n T a x C o m m is s io n posals have recommended revision of the The Institute has been communicating capital-gains tax. These include (1) the special 90 per cent wartime capital-gains with other organizations which last year supported the Carlson bill for a non­ tax to apply to capital assets acquired partisan tax commission, in an endeavor after a date such as January 1, 1945, and sold within two years of acquisition (pro­ to secure support for this year’s version posed by Marriner S. Eccles, chairman of (H J Res. 109). Replies to date have been encouraging. Some publicity on the new the Board of Governors of the Federal bill has already appeared in the press. Reserve System), and (2) the less drastic proposal which the Treasury is reported R ebecca N e w m a n G o l u b , to be considering of lengthening the hold­ Technical Assistant to the ing period for determining long-term cap­ Committee on Federal Taxation. ital gain from the present six months to eighteen months. Prior to the fear of Liability of Accountants in growing inflationary pressures, nearly all the postwar tax plans and tax authorities Government Service considered the present treatment of capital In the March issue of this bulletin, gains a step in the direction of providing beginning on page 2, was reprinted a incentive to business activity and full em­ provision of the Revenue Act of 1943, ployment during the transition and post­ relating to the liability of accountants war period. Accordingly, recommenda­ who have been in government service. tions have generally been made that the Attention has been directed to section present method of taxing capital gains be 19(e) of the Contract Settlement Act of retained until after postwar developments. 1944, which also relates to this subject, as Recommendations Nos. 10 and 11 of the follows: tax committee’s postwar-taxation report propose that revision of the present “ (e) It shall be unlawful for any per­ method of treating capital gains and son employed in any government agency, losses should be dealt with as part of long- including commissioned officers assigned range overhauling, except that capital to duty in such agency, during the period losses should be given corresponding such person is engaged in such employ­ ment or service, to prosecute, or to act as treatment as gains to remove deterrent to counsel, attorney, or agent for prosecut­ investment of capital in corporate enter­ ing, any claim against the United States, prise. or for any such person within two years after the time when such employment or T a x P o l ic ie s service has ceased, to prosecute, or to act as counsel, attorney, or agent for prosecut­ Maurice Austin, chairman of the In­ ing, any claim against the United States stitute’s committee on federal taxation, involving any subject matter directly and the secretary of the Institute, were in­ connected with which such person was so employed or performed duty. Any vited to two informal meetings in March, person violating any provision of this attended by representatives of a number subsection shall be fined not more than of prominent organizations interested in $10,000 or imprisoned for not more than tax policies. There is an evident desire to one year, or both.” The Certified Public Accountant 13

Five Sons in Armed Forces Record entered an order vacating and setting aside the adjudication against the One of the outstanding contributions accountant, apparently because he had to the present war by the family of a made restitution by way of a settlement certified public accountant has recently with the insurance company which had been discovered through an inquiry by the bonded him. The State Board, after editors of this bulletin. It has been hearing and the filing of briefs, entered learned that Frank J. Dooley of Middles­ an order suspending the accountant’s cer­ boro, Kentucky, practicing certified public tificate to practice as a public accountant accountant and a member of the American in Florida for a period of six months. Institute, is the father of five sons now For the purpose of reviewing the or­ serving with the armed forces of the der of the State Board, the accountant United States. Briefly, the record is as instituted certiorari proceedings in the follows: Supreme Court. The accountant’s at­ First Lieutenant Edward M. Dooley, torney took the position that the Crim­ Armored Amph. Tanks, 4th, Marines; inal Court’s order vacating its former Sergeant James F. Dooley, with the judgment prevented the Board from United States Army in Germany; Charles suspending the right to practice. The W. Dooley Ph. M/3, now stationed in the attorney for the Board took the position United States: Pfc. Lawrence F. Dooley, that guilt had been proved by the Crim­ with the United States Army in Germany; inal Court and that the Board was justi­ Patrick M. Dooley, on special duty with fied in entering the order of suspension, the United States Air Forces in this notwithstanding the fact that judgment country. In addition Mr. Dooley’s daugh­ was vacated because of restitution. ter, Mary E. Dooley, is a medical tech­ The Supreme Court decided in favor of nician in the Marine Hospital, New Or­ the Board and denied the accountant’s leans. One of the boys now in the service petition for a writ of certiorari. is a graduate in accounting and was pre­ paring for the CPA examinations when he entered the armed forces; another was an accounting student. A sixth son, Tom Dooley, is now a college freshman and Samuel R. Cohn of Newark, N. J., expects to major in accounting and law. died March 20th. Mr. Cohn was a partner in the firm of Samuel R. Cohn & Co. He State Board Sustained in was a CPA of New Hampshire and had been a member of the American Institute Suspension of Certificate of Accountants since 1931. The Florida Supreme Court, on March Walter E. Hall of Camden, N. J., died 6th, sustained the action of the State March 12th. He was a CPA of New Board of Accountancy suspending a cer­ Jersey and became a member of the Amer­ tificate to practice as a public accountant. ican Institute of Accountants in 1944. The suspended registrant, after trial in the Criminal Court of Record, was ad­ Edwin J. Naylor of New York, N. Y., judged convicted of embezzlement. The died March 16th. He was a partner in the passing of sentence was ordered sus­ firm of Edmonds and Naylor. Mr. Naylor pended from day to day and term to term had been a member of the American In­ until further orders of the Court. There­ stitute of Accountants since 1924. after the State Board filed a complaint against the accountant, charging him with John A. Retzke of Chicago, Ill., died having been convicted of a felony. March 5th. Mr. Retzke was a CPA of Shortly prior to the hearing before Illinois and became a member of the the State Board, the Criminal Court of Institute in 1944. H The Certified Public Accountant

State Accountancy Legislation for issuance of CPA certificate to any practicing accounting with two years’

R epo rts o n B il l s I n tro du c ed experience—referred to education com­ mittee. Passed by Senate February 12th, Arizona: H. 102, providing for ac­ reported favorably by education commit­ counting on basis of fiscal year for all tee of the House March 22nd. departments and state agencies and for J Georgia: S. 207, to amend chapter 74 licensing by such departments and agen­ of the Code to provide for nine members cies for practice of professional pursuits of the state board of accountancy; to on fiscal-year basis—referred to judiciary provide for publication of list of all committees in House and Senate. Passed certified public accountants—referred to February 16th, House, and March 11th, special judiciary committee. Bill failed by Senate. Vetoed by Governor March to pass. S. 55, to provide that the certi­ 21st. fied public accountant employed to audit California: A. 2155, Accountants—Li­ the books of Dodge County shall be se­ censing and Regulation—To include all lected by the judge of the Superior Court, public accountants in addition to certified and for other purposes — referred to public accountants for licensing and counties and county matters committee. regulation by State Board of Accountancy Bill passed House February 5th, and —referred to governmental efficiency and Senate January 24th. Approved by Gov­ economy committee; A. 878, relating to ernor February 12th. the Auditor General and the transfer of Illinois: H. 149, to extend until Octo­ certain duties heretofore exercised by the ber 1, 1945, the date when certified public State Controller and the Department of accountants may take advantage of the Finance to the Auditor General and pro­ provisions of the act regulating the prac­ viding for the auditing and management tice of public accounting passed in 1943 of the fiscal and business affairs of the —referred to banks committee. state—referred to governmental efficiency Indiana: S. 119, creates a state board and economy committee; A. 1950, adds of certified public accountants, providing to penal code relating to income-tax for examination and licensing of advisors—referred to judiciary commit­ certified public accountants — referred tee; S. 872, to add a section to the politi­ to judiciary committee. Passed Senate cal code, relating to the establishment February 9th, and House March 2nd. of a uniform system of State accounting Approved by Governor March 9th. referred to committee on governmental Kansas: H. 283, to amend section efficiency; S. 871, providing for preaudit 75-1123 G.S.S. 1943 by requiring audits by the Department of Finance of all ex­ be made by licensed municipal public penditures, and prescribing the procedure accountant or CPA—referred to judiciary therefor—referred to committee on gov­ committee and reported favorably. ernmental efficiency. Michigan: S. 276, to provide central Connecticut: H. 1031, providing for business records and business accounting, consolidation of 21 examining and licens­ with respect to certain professions and ing boards, for performance of secre­ vocations licensed by the state; and to tarial and administrative work—referred prescribe the powers and duties of the to licensed occupations committee; S. secretary of state with respect thereto, 345, providing a penalty for any public embraces the work for 15 boards from accountant making any false statement accountants to plumbers — referred to relating to the finances of a town—re­ state affairs committee. ferred to judiciary committee. Minnesota: H. 343 (Same as S. 299), Delaware: S. 80, to amend the CPA to provide for registration of public ac­ law by inserting an educational provision, countants — referred to general legisla­ and repealing a provision which provides ture. The Certified Public Accountant 15

Missouri: H. 302, relating to registra­ the names of those actually in business; tion of public accountants and issuance prohibiting use of name of deceased of certificates to applicants already in partner or dissolved partnership—to pro­ practice. fessional licensure committee. New Mexico: H. 267, relating to quali­ Tennessee: S. 794 (Same as H. 1049) fications for registered accountants—re­ exempts members military forces from ferred to judiciary committee. paying renewal of accountancy licenses— New York: S. 850 (Same as A. 902), passed both Senate and House, and provides disciplinary proceedings against approved by Governor. persons practicing medicine and other Texas: S. 176, establishes State Board professions may be heard by 3 persons, of Public Accountancy and governs one of whom may be member of regents, accounting generally — referred to com­ to be designated by regents or by chan­ mittee on state affairs. cellor of university; hearings shall be Washington: H. 504, providing for upon record before grievance committee revision of the accounting system pres­ or board of examiners of professions for ently being used by state agencies; defin­ which there is no grievance committee ing the powers and duties of certain state —referred to education committee; S. officers in connection therewith. Passed 1441 (Same as A. 1626) to amend the both Senate and House, and approved by education law in relation to the practice Governor March 15, 1945; H. 437, re­ of public accountancy. Bill died in com­ lating to public accountancy; providing mittee. for the admission of certain persons to J North Carolina: H.B. 142, to amend practice as Certified Public Accountants; section 2-46 of the General Statutes of and amending chapter 72, Laws of 1903, North Carolina so as to substitute the by adding two new sections—referred to report required by the clerk of the court. veterans affairs committee; H. 285, pro­ Passed by both Senate and House and vides that professional licenses of people ratified by Governor February 9, 1945. in armed service shall be automatically renewed during war service and six Ohio: H. 320, to create state board of months thereafter—referred to judiciary registration for accountancy practice committee. (three members), and to set up quali­ fications for granting certificates — re­ Puerto Rico Institute Elects ferred to judiciary committee. At its annual meeting in San Juan on Oklahoma: H. 201, creating a state February 17th and 18th, Puerto Rico board of municipal accounting. Bill failed Institute of Accountants reelected Presi­ of passage, and legislature adjourned sine dent B. Rosas Hernandez, Vice-President die March 15, 1945. Rafael Garcia Moreno, and Secretary Pennsylvania: H. 953, to further Enrique M. Vassallo. Raúl García del amend Sec. 2 of Certified Public Ac­ Rosario was elected treasurer. countant Law of 1899, by providing for examinations of applicants twice a year, "The Accountant” in May and November—referred to pro­ The American Institute has made fessional licensure committee; H. 948, arrangements with the New York Times to add Sec. 2.1 to Act of 1899, to provide Studio, 229 West Forty-third Street, New for submission of proof of educational York, by which reproductions of the and experience requirements as a prereq­ Rembrandt painting entitled “The Ac­ uisite to examination; H. 944, to further countant” may be secured. The prints are amend Certified Public Accountant Law sized 11 x 14 inches and cost $3 each. of 1899, by prohibiting practice of Several members of the Institute have accounting under any other name than asked how they might secure this picture. 16 The Certified Public Accountant

Election of Members

A labam a N ebraska *Franklyn H. Sweet, Dothan *Norbet G. Bausch, Omaha *Reidar H. Magnussen, Grand Island A rizona *Edward R. Martin, Lincoln *Arleigh R. Burton, Phoenix N ew J ersey California *Claude H. Billingsley, Los Angeles Herman Howard, Perth Amboy Wilford G. Edling, Los Angeles Wallace J. Sherlock, Newark *David L. Moonie, San Francisco *Mary S. Tross, Newark *Otho E. Smith, Los Angeles N ew Y ork *Herman J. Zweig, Los Angeles Leland La Dow Baker, New York John F. Brady, New York Connecticut *Edward G. Breitwieser, New York *Lawrence J. Colman, Bridgeport *F. Harry Brown, New York D istrict of Colum bia *Marion J. Cadley, New York James A. Councilor, Jr., Washington *John J. Connelly, New York Fenton G. Harvey, New York F lorida Meyer Hellman, Beacon *George H. Williams, Jr., Miami *Carl A. Hoehl, New York Georgia Theodore R. Jarvis, New York *Louis P. Dowdell, Jr., Columbus *Morton M. Lowenbraun, New York David C. Hemrick, Jr., Atlanta John R. Melish, New York Daniel A. Horn, Atlanta Arthur Michaels, New York *Fleming M. Love, Jr., Augusta *Oscar J. Sufrin, New York *Albert H. Searcy, Thomaston O hio I llinois Philip J. Brennan, Dayton Benno B. Epstein, Chicago *Joseph W. Essman, Columbus *William J. Kearney, Chicago *Richard E. Isaacson, Cleveland William G. Reid, Jr., Chicago Raymond E. O. Slater, Chicago O regon *Horace D. Woodcock, Chicago *David S. Pattullo, Portland I n d ia n a P ennsylvania †David W. Thompson, Bloomington Frank B. Carll, Reading Robert T. Engart, Philadelphia K e n tu c k y *William J. McKeever, Philadelphia *William J. Glover, Louisville *Sidney L. Neff, Philadelphia *John C. Heffner, Louisville David LeRoy Robbins, Philadelphia *Ben R. Shaver, Louisville William T. Royston, Pittsburgh L o u is ia n a John S. Schumann, Philadelphia *William R. L. Burroughs, Shreveport †Hershel H. Herring, Shreveport T e n n e ssee *Glenn P. Smith, Chattanooga M aryland *Joseph D. Womack, Johnson City *Jay W. Bell, Baltimore †Harvey T. Casbarian, Baltimore T ex a s *Frederick W. Reis, Baltimore †Charles L. Fletcher, Houston *Harry E. Hurst, Dallas M assachusetts *Harold B. Shile, Amarillo *Robert P. Cassidy, Springfield *Lawrence H. Cousineau, Boston V irg inia *Ira M . Dohanian, Boston George M. Cootes, Norfolk Orville S. Parker, Boston *Harold T. Easley, Newport News *Charles W . Eure, Richmond M ich ig a n Ralph P. Yount, Richmond John G. Cotton, Grand Rapids Thomas E. Foote, Grand Rapids W isc o n sin *Charles L. Lockwood, Milwaukee M issouri *Casimir A. Kerwin, Milwaukee *Karney A. Brasfield, Kansas City Dale W. Jones, Kansas City C uba †James C. Thompson, St. Louis †Joseph Loutit, Havana † Advanced to membership. * Admitted as associates. THE C e r t if ie d P u b l ic A c c o u n t a n t A Bulletin of The American Institute of Accountants

V o l. 25 M a y , 1945 No. 5

Nominations Members of the Institute in the states The American Institute of Accountants indicated will be requested to submit to committee on nominations at a meeting at the committee on nominations names of New York, May 11, 1945, unanimously members whom they recommend for nominated the following members for nominations as members of council. election to the offices indicated for the The members of the committee on fiscal year 1945-1946: nominations, all of whom were present at the May 11th meeting, are as follows: President: Victor H. Stempf, New York, Chairman; T. D w ig h t W i l l i a m s , Oklahoma Ernest H. Fletcher, Michigan; Thomas J. Dolan, Ohio; Thornton G. Douglas, Vice presidents: California; William H. Goldberg, Colo­ H o m er N. S w e e t , Massachusetts rado; Byron P. Harris, Georgia; Harvard E a r l A. W aldo , Minnesota L. Mann, Massachusetts. Treasurer: M a u r ic e E. P e l o u b e t , New York JTR Revised The committee also unanimously se­ lected the following states from which The first comprehensive amend­ members of council are to be elected for ment to the Joint Termination terms beginning with the fiscal year Regulation (JTR ) was issued by the 1945-1946: War and Navy Departments as Re­ For terms of three years: vision No. 1, under date of April 20, California ...... 2 members 1945, and the entire Regulation has Connecticut...... 1 member been reprinted. Changes generally Illinois...... reflect new policies and procedures Indiana ...... adopted by the services and other Kansas ...... governmental bodies since the orig­ Kentucky...... inal Regulation was issued on No­ Maryland ...... vember 1, 1944. There is no sub­ Massachusetts ...... New York ...... stantial modification in general prin­ North Carolina ...... ciples. Copies of the revised JTR are Tennessee ...... available from the Readjustment Utah ...... Distribution Center, Federal Office Washington ...... Building, 6th Floor, 90 Church For a term of one year (to fill a vacancy) : Street, New York 7, New York. District of Columbia...... 1 member

PUBLISHED BY AMERICAN INSTITUTE PUBLISHING CO., INC. 13 East 41st Street, New York 17, N. Y. 2 The Certified Public Accountant

Another question in the same field Secretary’s Notes arose in consideration of the First De­ ficiency Appropriation Bill of 1945. At The outstanding event of the past the request of the Comptroller General, month was the council meeting in New provisions were inserted in this bill York, May 1st and 2nd. While atten­ authorizing him to employ ten persons dance was limited by wartime convention without regard to the Classification Act rules, every part of the country and every of 1923, at salaries up to $10,000, to head segment of the profession was well rep­ his new “commercial audit” division; resented. All major current problems of authorizing him also to employ profes­ the accounting profession were discussed. sional firms and organizations for tem­ A summary of the meeting appears else­ porary periods or for special purposes; where in this bulletin as a special item. providing that the expense of audits would ultimately be borne by the corpora­ F ed er a l G o v e r n m e n t A c c o u n t in g tions audited; and providing that no A highlight of the council meeting was funds of any government corporation the appearance at dinner of the Honor­ could henceforth be used to pay the cost able Lindsay C. Warren, Comptroller “of any private audit of the financial General of the United States. He was transactions of such corporations . . .” accompanied by the Assistant Comp­ This last phrase aroused some concern troller General, Frank L. Yates. Mr. lest it might be interpreted so as to pre­ Warren had accepted an invitation to vent the employment of public accounting appear before the council to discuss the firms by federal government corpora­ problem he faces in the audit of federal tions to audit private business concerns government corporations “in accordance acting as contractors for such corpora­ with principles and procedures applicable tions. This bulletin last month referred to commercial corporate transactions,” to the practice of the Reconstruction under the George bill. He asked the co­ Finance Corporation in this respect. operation of the accounting profession in The secretary discussed this matter in providing competent accounting per­ Washington with the Assistant Comp­ sonnel and indicated that he would wel­ troller General, and the Chairman of the come the profession’s advice. House Appropriations Committee, to About a week before, on April 23rd, whom he subsequently wrote as follows: George P. Ellis, chairman of the Institute “Hon. Clarence Cannon, Chairman, committee on governmental accounting, Appropriations Committee, had testified before the Senate Committee House of Representatives, on Banking and Currency on the Byrd- D e a r S ir : Butler bill, which is in effect an elabora­ “I sincerely appreciate your courtesy tion and extension of the provisions for in permitting me to interrupt your con­ financial control and audit of federal ference Wednesday afternoon to speak government corporations laid down in the with you for a few minutes about the George bill. Mr. Ellis expressed approval provision of the pending deficiency ap­ of the application of generally accepted propriation bill, HR 2374, as amended auditing procedure to federal govern­ by the Senate, which relates to audits of ment corporations, but questioned pro­ federal government corporations. visions of the bill which seemed to place “The bill contains under the caption both administrative responsibility and ‘General Accounting Office’ (page 13, line 19) the following provision: responsibility for independent audit in the same hands—those of the Comptroller “‘Provided further, That, unless otherwise expressly provided by law, General. A report of Mr. Ellis’ testi­ no funds of any government corpora­ mony will appear in The Journal of Ac­ tion shall be used to pay the cost of countancy. any private audit of the financial trans­ The Certified Public Accountant 3

actions of such corporation except the cost of such audits contracted for and undertaken prior to the date of ap­ Refresher Course for proval of this act/ Public Accountants “The purpose of this provision is The refresher-course material, pre­ clearly to prevent duplication of expense viously described in this bulletin, will for auditing of government corporations. The question has arisen, however, whether be called Contemporary Accounting the language of the provision might not —A Refresher Course for Public be construed to go further than intended. Accountants. Manuscripts for all The phrase ‘financial transactions’ is chapters are expected to be ready for rather broad, and might be construed so the printer before the end of May as to prevent arrangements by govern­ and copies should be available for ment corporations, such as the Recon­ sale in July. Each of the 38 chapters struction Finance Corporation, to have will be separately bound and punched private audits’ made of contractors with for inclusion in a post binder. whom they deal—that is, private business firms which act for the government cor­ A list price of $10 per copy has porations as contractors and which must been set for the course. A 15 per be required in certain types of circum­ cent discount on orders for ten or stances to make an accounting to the more copies has been approved. A federal government corporation con­ 25 per cent discount will apply to cerned. I have been given to understand all purchases by veterans and by by the General Accounting Office that the educational institutions. above provision was not intended to pre­ Descriptive circulars containing vent arrangements for audits of this type, order blanks are now being prepared and we therefore respectfully request that the quoted provision be clarified by for mailing to members of the Insti­ amendment, or that the report of the tute, accounting firms, and schools conferees clarify its intent for the rec­ and colleges. Members of the Insti­ ord. A possible amendment would be to tute may place orders now for ship­ substitute for the present phrase ‘the ment and billing on publication. financial transactions,’ the clause ‘the Orders from nonmembers, accom­ financial records of the offices of such panied by remittances, will also be corporation.’ accepted and filled after publication “It has been suggested by some of our date in the order of receipt. A few members interested in this matter that the firms have already indicated their entire provision quoted above might well be deleted, at least for the time being, in intention to use the refresher-course view of the fact that the Comptroller material for staff training. The first General has not had time to organize a firm order was received recently for staff to discharge the responsibility for sixty copies. audit of all government corporations be­ ginning with the current fiscal year. The Comptroller General has already testified as to the magnitude of the task which eral in his organization and planning of confronts him and if the corporations subsequent audits after he has secured the concerned are prevented from making necessary personnel to proceed.” whatever other arrangements for ade­ “Yours respectfully, quate audits they may desire to make in “J o h n L. C a r e y , Secretary.” the transition period, it is possible that The bill was at that time in conference. no effective audit of them can be made for some time. On the other hand, any The result of the letter is shown in the private audits of federal government cor­ following excerpt from the Congressional porations by public accounting firms dur­ Record of April 18th. ing the transition period should be of “The Clerk read as follows: considerable help to the Comptroller Gen- “Mr. Cannon of Missouri moves that 4 The Certified Public Accountant the House recede from its disagreement under 30 years of age, employed by pub­ with Senate Amendment No. 24 and lic accounting firms. This affords a basis agree to the same with an amendment, as for expectation that the War Production follows: In lieu of the last proviso in Board may take jurisdiction in such cases said amendment, insert ‘Provided fur­ when there appears to be no other ap­ ther, That, unless otherwise expressly provided by law, no funds of any govern­ propriate certifying agency. The Insti­ ment corporation shall be used to pay the tute is investigating this possibility. cost of any private audit of the financial As this bulletin goes to press, National records of the offices of such corporation Headquarters of Selective Service an­ except the cost of such audits contracted nounces that provisions of a Selective for and undertaken prior to the date of Service memorandum requiring local approval of this act.' boards to reopen immediately and review “M r . C a n n o n of Missouri. Mr. the special form bearing the certification Speaker, the purpose of this provision is of one of the agencies authorized to to prevent duplication of expense for auditing of government corporations. The certify deferment requests (Form 42-A question has arisen, however, whether (Special-Revised)) will be terminated the language of the provision might not May 15th. Deferment requests certified be construed to go further than intended. by authorized agencies which are re­ The phrase ‘financial transactions’ is ceived by local boards after that date will rather broad, and might be construed so be considered in accordance with the gen­ as to prevent arrangements by govern­ eral provision of Selective Service regu­ ment corporations, such as the Recon­ lations governing reopening and reclassi­ struction Finance Corporation, to have fication. Under these regulations a local ‘private audits’ made of contractors with board may reconsider, at its discretion, whom they deal—that is, private busi­ the classification of an applicant but such ness firms which act for the government corporations as contractors and which action is no longer mandatory. must be required in certain types of cir­ C o m m it t e e M e e t in g s cumstances to make an accounting to the federal government corporation con­ Meetings of the committee on profes­ cerned. sional ethics and the executive committee “The General Accounting Office has were held on the day preceding the coun­ indicated that the provision is not intended cil meeting. The committees on federal to prevent arrangement for audits of this taxation, state legislation, and public in­ type. The conferees on the part of the formation met during April. House accordingly propose to agree to the Senate amendment with an amend­ I n s t it u t e O f f ic e r s ment clarifying the proposition in this respect. Samuel J. Broad, president of the In­ “T h e S p e a k e r pro t e m p o r e . The stitute, entertained past presidents and question is on the motion offered by the members of the executive committee at gentleman from Missouri. a dinner in New York the evening before “The motion was agreed to.” the council meeting. On April 14th he The final language of the bill which addressed the annual meeting of the New has since been submitted to the President York State Society of Certified Public for approval, includes the amendment Accountants. recommended by the Institute. Edward B. Wilcox, vice-president of the Institute, addressed the Kansas City S ele c t iv e S er vic e Chapter of the Missouri Society on Reports of members indicate that in April 26th. The secretary of the Insti­ some instances offices of the War Pro­ tute spoke at the annual meeting of the duction Board have certified forms 42 A Rhode Island Society of Certified Public (Special-Revised) requesting occupa­ Accountants at Providence on April 17th, tional classification for staff accountants, discussing professional problems. The Certified Public Accountant 5

I n s t it u t e S t a f f auditor for a knowledge of significant On April 26th Carman Blough, direc­ events occurring subsequent to the com­ tor of research, presented one of a series pletion of an audit which affect the cli­ of lectures conducted by the Practising ent’s financial position and for the recog­ Law Institute in cooperation with the nition or disclosure of those events or American Institute of Accountants and effects in the financial statements and the New York State Society of Certified Public Accountants. His subject was the “Effect of SEC and Treasury Depart­ ment Policies on Application of Account­ NAM President Honored ing Principles.” In recognition of the fact that Ira An article entitled “Educational Pre­ Mosher, 1945 president of the Na­ requisites for the Certificate” by Thomas tional Association of Manufacturers, W. Leland, educational director of the is a certified public accountant, mem­ American Institute of Accountants, was bers of the profession held a public published in The Accounting Review for dinner in his honor at the Hotel April. Copley Plaza in Boston on April J. L. C. 23rd. More than 300 accountants and business executives attended. Hosts at the dinner were the Mas­ sachuetts Society of Certified Pub­ Research Department lic Accountants and the American Institute of Accountants. Mr. Mosher has been a member of both organiza­ Co m m it t e e o n A c c o u n t in g P ro cedure tions for more than thirty years. The agenda for the May 15th-16th He was the principal speaker and meeting of the committee on accounting combined in his address reminis­ procedure has been prepared with the cences of earlier days in accountancy view of providing extensive considera­ and comments on proposals for labor- tion of a number of accounting problems management cooperation. of current interest, including: (a) Ex­ Homer N. Sweet of Boston, a periences in the application of the pro­ member of the American Institute cedures recommended by Accounting Re­ council and a past president of the search Bulletin No. 23. (b) The Treasury Massachusetts Society, was toast­ Department’s interpretation of section 41 master. Greetings on behalf of the of the Internal Revenue Code and the profession were offered by Samuel accounting implications of the Tax J. Broad, president of the American Court’s decision in the South Tacoma Institute, and Harvard L. Mann, Motor Company case. (c) The treatment president of the Massachusetts So­ of amortization of facilities under certifi­ ciety. C. Oliver Wellington, a past cates of necessary. (d) The treatment of president of the Institute and an early postwar reserves in statements of income associate of Mr. Mosher, introduced or surplus to be prepared in future years. the guest of honor. (e) A proposed amendment to section A feature of the dinner was an 5-03 of SEC Regulation S-X. address by Governor Maurice J. Tobin of Massachusetts, who praised C o m m it t e e o n A u d it i n g P rocedure the members of the profession in Subcommittees of the committee on Boston for helping to solve account­ auditing procedure are currently engaged ing problems of that city when he in a review of materials relating to these was its mayor. problems: (1) The responsibility of the 6 The Certified Public Accountant auditor’s certificate. This problem arises gestions for its studies of current ac­ primarily in connection with the filing counting problems. Copies of the state­ of a letter of consent to the use of the ments furnished will be made available, auditor’s certificate in securities registra­ upon request, to other local or state tions. (2) A change in the language of organizations having a similar program. the auditor’s short-form report to pro­ Members of Pittsburgh Chapter of vide greater simplicity and clarity of Pennsylvania Institute discussed Account­ expression. ing Research Bulletin No. 24, “Account­ ing for Intangible Assets,” at a meeting N et I n c o m e for t h e Y e a r on March 27th. At Maryland Association’s meeting on A suggestion has been made to the May 8th, Charles W. Smith, Chief, Bu­ committee on accounting procedure that reau of Accounts, Finance, and Rates, it cooperate with the stock exchanges and Federal Power Commission, led discus­ with the financial reporting services to sion of Bulletin No. 5 entitled “Deprecia­ secure the adoption of a practice of tion on Appreciation.” Bulletin No. 23, using some distinctive symbol to identify “Accounting for Income Taxes,” and all items purporting to represent net in­ Bulletin No. 24, “Accounting for In­ come for the year when the amount re­ tangible Assets,” were discussed on the ported does not reflect the total change same program. (other than dividends) in the corporate earned surplus for the period. In support C a r m a n G. B l o u g h , of the suggestion, it was stated that the Director of Research. adoption of such a practice would pro­ vide additional notice to the general reader of reported financial information Educational Department that, in certain cases, data other than those provided by the income statement must be used in order to obtain a com­ S e l e c t io n of P e r s o n n e l plete analysis of the results of the cor­ porate transactions for the year. The committee on selection of per­ sonnel held a meeting at the Institute

R e s e a r c h S t u d y P r o je c ts offices on April 23rd. The second quar­ terly report of the project was received Following the April 23rd meeting of from Dr. Ben D. Wood and reports of the Philadelphia Chapter of the Pennsyl­ test-construction activities were received vania Institute at which George D. from Dr. K. W. Vaughn and Professor Bailey, John H. Zebley, Jr., and the di­ Leo A. Schmidt. rector of research discussed the work and The Strong Vocational Interest Blanks problems of the committee on account­ of 1,909 public accountants have been ing procedure, the research groups’ chair­ scored and tabulated and the results man of the Philadelphia Chapter was analyzed. This number of cases is suf­ furnished copies of statements relating to ficient for purposes of the research the current problems under consideration project, but the committee has authorized by the committee and the research de­ the invitation to submit tests for scoring partment. This material is to be used to be kept open to Institute members. as a basis for discussion and study by the The interest tests taken by nonmembers research groups which have been set up will continue to be scored at a fee of under the Philadelphia Chapter’s pro­ $1.10 per test (or $1.00 each in groups gram of professional activity. This pro­ of ten or more) through the regular gram should provide the committee on scoring service of the Educational Rec­ accounting procedure and the research ords Bureau, the operating organization department valuable assistance and sug­ for the project. Tests submitted for The Certified Public Accountant 7 scoring should be sent direct to the Edu­ prepared and are being considered by the cational Records Bureau, 437 W. 59th committee. Street, New York 19, New York. The interest and cooperation of the The immediate objective of the ex­ colleges engaged in training young men periment with the vocational interest for accountancy is essential to success blank for men is to develop and improve of the project which the committee has the statistical data which will be useful undertaken. The committee plans to in­ in the interpretation of individual scores vite the participation of a selected group for accountants at each of the five levels of colleges as soon as sufficient progress of partners, managers, seniors, semi­ has been made in the preparation of tests. seniors, and juniors, and for accountants The project promises to be helpful to the as a single group. schools in the development of a more ef­ The committee believes it desirable to fective guidance program during the col­ construct tests at the following levels: lege career. 1. A test of general aptitude for the study of accounting which would be ad­ C o m m it t e e o n E d u c a t io n ministered to high-school seniors, col­ lege freshmen, and others at or near John W. Queenan, chairman of the the time of beginning accounting committee on education, has announced courses. the agenda for the joint conference of 2. An achievement test to be adminis­ the Institute’s committee on education and tered to college students upon comple­ the commitee of the American Account­ tion of the first full-year course in ing Association, scheduled to be held in accounting. Chicago on June 22-23, 1945. This pro­ 3. An achievement test to be administered to accounting majors at the time of gram includes the consideration of col­ graduation from college. The same lege curricula, administration of account­ test or a closely similar one would ing courses, and making available to be given to junior accountants with students information about the public limited experience. accounting profession. It also includes 4. A test to be taken by junior account­ a discussion of the coordination of work ants with considerable experience and of state societies’ education committees, by semi-seniors to measure qualifica­ preparation of bibliography of more im­ tion for semi-senior or senior work. portant books on accounting and its re­ 5. An objective examination at the CPA lated fields of sepecialization, and level, as a possible supplement to the usual CPA examinations. problems of staff education. It is hoped that the discussion of these The test of general aptitude for the subjects will lead to the adoption of a study of accountancy is being constructed long-range program of objectives and by Dr. K. W. Vaughn. It will be ready that some definite conclusions will be for the first experimental tryout in the reached as to one or two items in the near future. tentative agenda. The committee has Professor Leo A. Schmidt of the done a considerable amount of work in Harvard Graduate School of Business the revision of the American Institute Administration is working with Dr. of Accountants pamphlet Accountancy Vaughn in the development of the achieve­ Is a Career for Educated Men, and hopes ment tests. The committee believes that to have a revised pamphlet on this sub­ the first achievement test should have a ject available for general distribution content in mathematics, clerical aptitude, within the next few weeks. auditing, and accounting. Tentative questions of various types for the achieve­ O t h e r E d u c a t io n a l D evelopments ment tests to be administered to college students upon completion of the first Cornell University has announced full-year course in accounting have been plans to establish a school of business 8 The Certified Public Accountant administration which will open in the Fall search has now begun on this project. of 1946. Professor Paul M. O’Leary, The possibility of filing briefs, amicus who will be dean of the school, has indi­ curiae, in appropriate tax proceedings in­ cated that plans have been made to de­ volving accounting principles is also velop considerable strength in accounting receiving current attention. in the new curriculum. A bill has been introduced in the P o st w a r T a x a t io n Senate, (S 826) which would authorize Special attention is being given to pro­ correspondence schools to participate in cedures for expediting carry-back refunds a program for education of veterans. as well as to the availability of postwar This bill has been referred to the Com­ excess-profits-tax refund bonds as a mittee on Finance. source of liquid capital for reconversion. A bill to extend the rehabilitation and educational benefits under veterans’ regu­ A dministrative a n d P r o cedu r a l lations has been introduced in the Senate M a t te r s (S 855) and has been referred to the Depreciation Deductions—The com­ Committee on Finance. mittee reaffirmed its disapproval of “in­ T h o m a s W. L e l a n d , centive” depreciation proposals as an un­ Educational Director. sound basis for reporting net taxable income, and noted further that where new equipment is purchased, an ordinary Tax Department loss is permitted on the sale or abandon­ ment of the existing equipment which makes acceleration unnecessary in most An all-day meeting of the committee cases. However, it was felt that revision on federal taxation was held on of administrative policies with respect to April 20, 1945. Major subjects discussed depreciation deductions is necessary in which are now receiving the attention of order to enable venture capital to deter­ the committee include the following: mine the extent of depreciation allowances which will be permissible and to eliminate Accounting v. Taxable Concepts continual and frequently insignificant o f I n c o m e changes from year to year. Possible The committee resolved, as one of its methods of liberalizing present adminis­ primary projects, to make a complete trative policies are receiving considera­ study of the subject of accounting for tion now. tax purposes with a view to recommend­ Natural Business Year Changes—The ing legislation and administrative action possibility of legislation designed to which will eliminate, or at least greatly eliminate tax benefits or tax disadvan­ reduce, the increasingly wide gap between tages resulting from fiscal-year changes generally accepted accounting principles made for sound business reasons, and not and accounting procedures recognized for the purpose of gaining tax advan­ for tax purposes by rulings and tax de­ tages, is receiving attention. The com­ cisions, particularly in such matters as mittee noted with approval a report by prepaid income, deductions for accrued the natural business year committee in­ taxes, and reserves. As part of this dicating that the Bureau plans a liberal­ project, it is hoped in time to release ized policy in granting such changes. statements of the committee’s position on proper accounting procedures to be T e c h n ic a l R ecommendations employed for tax purposes which will Various technical problems involving be available for citation in appropriate errors or inequities considered sufficiently proceedings as the committee’s official important to counterbalance the general statement of policy in this matter. Re­ undesirability of continuous technical The Certified Public Accountant 9 changes, were reviewed by the committee, including the recent Bureau of Internal Public Information Department Revenue ruling, IT 3720, requiring that the entire amount of the excess-profits R a d io B ro a d c a st s tax before reduction by the postwar credit Arrangements have been made for will have to be taken into consideration broadcasts by the president of the Insti­ in computing the equity invested capital, tute in connection with recently an­ whereas the postwar-refund credit cannot nounced accounting conferences of eight be taken up until the succeeding year at state society groups in May and June. a time when it is actually paid. To date, four important stations, all linked to national chains, have allotted N o n p a r t is a n T a x C o m m is s io n time. Various organizations interested in President Broad will go on the air at taxation which were informed of the the studio of Station WKBW in Buffalo resolution adopted by the executive com­ on May 31st. He will be interviewed on mittee, urging immediate consideration tax and other problems by Wade Steven­ by the House Ways and Means Com­ son, Chairman of the Board of Safety, mittee of the Carlson bill, H.J. Res. 109 City of Buffalo. On June 1st, Mr. Broad providing for the establishment of a and Herbert P. Ladds, president of the federal tax commission, have responded Cleveland Chamber of Commerce, will indicating general sympathetic reaction. broadcast from WHK in that city. Several state societies of certified public The studio of WWJ in Detroit will be accountants, including Connecticut, Cali­ the scene of a co-broadcast by the Insti­ fornia, and Michigan, have already passed tute president and Ben E. Young, vice- resolutions similar to the one adopted president of the National Bank of Detroit, by the executive committee. An editorial on June 4th. At Station WIBC in In­ appeared in the April 21, 1945, Saturday dianapolis, on June 6th, Mr. Broad will Evening Post, resulting from Institute be interviewed by Russell L. White, presi­ action, discussing the Carlson bill. The dent of the Indiana National Bank. committee will continue to keep the need Financial editors of newspapers, and for a nonpartisan tax commission before representatives of press associations, have the public. been informed of the coming conferences, Institute members who have any sug­ and will be furnished with news digests gestions or comments on tax questions are of the conference addresses. invited to communicate with Maurice P ost E d it o r ia l Austin, chairman of the committee on A recent interview of the assistant federal taxation. secretary in charge of public information R ebecca N e w m a n G o l u b , with an editor of the Saturday Evening Technical Assistant to the Post resulted in the publication in the Committee on Federal Taxation. April 21st issue of an editorial entitled ‘‘Federal Taxes Need Some Intensive An Invitation from Paris Study.” The editorial supported the Carlson bill, H. J. Res. 109, originally A letter received from M. Paul Cau­ introduced as a result of the Institute’s jolle, Conseil Superieur de l’Ordre Na­ advocacy of a nonpartisan tax commis­ tional des Experts Comptables et des sion to simplify the tax structure. Comptables Agrees, invites any members Reproductions of the Saturday Evening of the American Institute of Account­ Post editorial were sent to the members ants who have occasion to visit Paris to of the Committee on Ways and Means of call at its offices located at 109 Boulevard the United States House of Representa­ Malesherbes, Paris (8e). tives ; to members of the Institute council 10 The Certified Public Accountant and committee on federal taxation; and Spring Council Meeting to state society presidents. The regular midyear meeting of coun­ P r e ss C o m m e n t cil was held at the Waldorf-Astoria Hotel in New York, May 1st and 2nd. Because Editors of 398 newspapers and periodi­ of wartime travel restrictions, attendance cals receive special items of public inter­ was limited to 50 out-of-town members est which arise from activities of the In­ of council and committee chairmen in stitute. These items include editorials in addition to those situated in New York The Journal of Accountancy, and reports City. Approximately 35 committee re­ and statements by Institute officers and ports were presented and discussed. committees. This type of mailing resulted Lindsay C. Warren, Comptroller Gen­ in the publication in April of two news­ eral of the United States, and Frank L. paper editorials based on the recom­ Yates, Assistant Comptroller General, mendations of the committee on govern­ spoke informally at a dinner meeting on mental accounting for improvement in the May 1st. Reports of major interest will accounting systems of the federal gov­ be distributed to the membership in pam­ ernment. phlet form. Following is a summary of One of these editorials, headed “Clock­ some of the reports presented: ing the Spending,” was published in the Herald of Grand Rapids, Michigan. The R eport of t h e S ec r eta r y other, headed “Down to Fundamentals,” The membership is now over 8,600. appeared in the Register-Republic of Membership has increased at the rate of Rockford, Illinois. These comments were approximately 10 per cent a year for the based on an editorial entitled “Federal past three years. More than 900 mem­ Government Accounting” published in bers are now serving in the armed forces. The Journal of Accountancy. Members of the Institute staff total 47. Members of the committees on bank­ B oard of E x a m in e r s ing and currency of the House and Senate received advance proofs of an editorial Uniform CPA examinations prepared entitled “OPA and Accepted Accounting by the Institute were offered in Novem­ Principles” to appear in the May issue ber, 1944, in 41 states, the District of of The Journal of Accountancy. News Columbia, one territory, and by the announcements of the Elijah Watt Sells Treasury Department. Papers were sub­ awards were mailed to local newspapers. mitted by 1,920 candidates. Five cooperat­ ing states and territories did not hold S p e a k e r s ’ B u r e a u examinations. Last month arrangements were made E x e c u t iv e C o m m it t e e for the following appearances: Charles The committee approved a proposal Melvoin, a member of the committee on that the Institute suggest to state socie­ federal taxation, and Major Jacob B. ties of certified public accountants the Taylor of the Office of the Fiscal Direc­ appointment of local committees to co­ tor, Army Service Forces, as speakers operate with government agencies in at the annual Accounting Institute of the providing vocational guidance, placement Minnesota Society and the University of service, and educational facilities for ac­ Minnesota in Minneapolis on May 25th; countants returning from the armed Lt. Col. Victor Z. Brink of the Office forces. Twenty-three state societies have of the Fiscal Director, Army Service appointed such committees. On instruc­ Forces, before the annual meeting of tions of the executive committee, the sec­ Harrisburg Chapter of the Pennsylvania retary prepared a memorandum analyz­ Institute on May 22nd. ing the provisions of the accountancy F r a n k A. G a l e , laws of the several states relating to Assistant Secretary. practice by foreign accountants, and sub­ The Certified Public Accountant 11

mitted it to the State Department with was adopted providing that the Institute an argument for free passage across in­ express its opinions on accounting ques­ ternational boundaries by accredited pro­ tions involving conflicting points of view fessional accountants. In the administra­ between governmental agencies. tion of the federal wage and hour law, it is the sense of the executive com­ A u d it in g P ro cedure mittee that every effort should be made Subcommittees have been appointed to to maintain recognition of the profes­ consider possible committee action in sional status of public accountants. On references to independent accountants in recommendation of the executive com­ securities registrations, revision of the mittee, the firm of Alexander Grant & accountant’s certificate, and revision of Company was elected by council to con­ the pamphlet, Examination of Financial duct the audit of the Institute for the Statements. A notice to the effect that fiscal year ending August 31, 1945. The material in this pamphlet has been super­ committee resolved that fiscal-year seded in part by more recent statements changes should be made for sound busi­ of the committee has been imprinted on ness reasons, and that such changes should the cover. Meetings have been held with result in neither tax benefits nor tax Army representatives to consider the disadvantages to the taxpayer concerned. adequacy of inventory accounting and The committee has no objection to legis­ auditing procedures for United States lation designed to eliminate such tax Army supply depots. The committee re­ benefits and penalties. Trustees of the viewed a draft of form S-12, proposed Benevolent Fund have accepted as a gift by the SEC for use in registration of from J. K. Lasser the manuscript of a securities of companies in a promotional book on contract termination, all royalties or development stage. A subcommittee from which will be received by the Fund. is studying the matter of disclosure in

P rofessional E t h ic s registration statements of events trans­ piring between the audit date and the No new cases involving complaints date of the accountant’s consent to the against Institute members have been re­ use of his report. ferred to this committee since the meeting of council in October. Summaries of G overnmental A c c o u n t in g committee opinions in response to inquir­ ies will be published in its report. The committee has participated ac­ tively, in cooperation with committees of A c c o u n t in g P rocedure Congress and governmental agencies, Three meetings have been arranged including the General Accounting Office, with state societies of certified public in consideration of means of improvement accountants to discuss the work of the of governmental accounting and auditing committee and its problems. Current —particularly plans for commercial-type projects include studies of income and audits of federal government corpora­ surplus, stock options, quasi-reorganiza­ tions, to be made by GAO under the tion, current assets and liabilities. George bill.

P u b l ic U t il it y A c c o u n t in g T e r m in a t io n a n d R enegotiation of W ar C o n t r a c t s Reference was made to conflicting views expressed by the Federal Power This committee discussed with repre­ Commission and by state public service sentatives of the Office of Contract Settle­ commissions with respect to accounting ment and of the War and Navy Depart­ principles involved in the Montana ments an advance draft of the Joint Power Company and the Arkansas Power Termination Accounting Manual. Upon & Light Company cases. A resolution request, the committee also reviewed ad­ 12 The Certified Public Accountant

vance drafts of the first ten termination C o n f e r e n c e of L a w y e r s a n d cost memorandums issued by the Office C e r t if ie d P u b l ic A c c o u n t a n t s of Contract Settlement. The committee has assisted the Director of Contract It was reported to the council that the Settlement in compiling information con­ National Conference of Lawyers and cerning the length of time required for Certified Public Accountants would meet settlement of claims between contractors in Washington, May 4th. Subjects to be and subcontractors and concerning diffi­ considered were regulatory accounting culties encountered by subcontractors in legislation, cooperation among local or­ plant clearance. ganizations representing both professions, controversial questions arising in the field F ed er a l T a x a t io n of tax practice, and educational activity The committee’s recommendations on designed to provide each profession with postwar taxation have been distributed information about the other. to members of appropriate Congressional C oordination of S t a t e a n d committees, Treasury Department, and N a t io n a l O rganizations Bureau of Internal Revenue officials, state society presidents, the press, and At the invitation of the committee chair­ various organizations interested in fed­ man, C. F. Milledge, chairman of the eral taxation. At the request of the Select Advisory Council of State Society Presi­ Committee on Small Business of the dents, reviewed the results of a recent House, copies of these recommendations questionnaire requesting comment on were filed as part of the record of that proposals for coordinating activities of committee’s investigation into the finan­ the Institute with those of state societies cial problems of small business. A state­ of certified public accountants. Of 43 ment by the chairman of the committee replies, 37 were favorable and 34 indi­ opposing so-called “accelerated” depreci­ cated their willingness to contribute finan­ ation allowances on new purchases of cially for at least one or two years. equipment, unrelated to actual useful life or actual obsolescence factors, as dis­ S t a t e L e g is l a t io n torting sound accounting policies and The committee has approved a draft productive of unfortunate economic and of a model regulatory accounting bill business results out of proportion to which will be published in The Journal possible benefit, was released to the press. of Accountancy for June. A total of 32 Various meetings and conferences, in­ bills introduced by state legislatures have cluding one with members of the House been referred to the attention of state Ways and Means Committee, have been societies of certified public accountants held in an effort to maintain continued in the period covered by this report. support for the establishment of a non­ partisan tax commission to make a com­ S e l e c t io n of P e r s o n n e l plete study of federal tax laws and submit recommendations for simplifica­ The first two in a series of quarterly tion, integration, coordination, consis­ progress reports have been submitted by tency, and permanency. Dr. Ben D. Wood, project director. Con­ tributions to the Foundation for the Insti­ A c c o u n t in g M a n p o w e r tute’s personnel project from December The committee has kept the membership 1, 1943, to March 31, 1945, amounted to informed of changes in selective service $51,853. rules and has discussed with the appropri­ C o o p e r a t io n w i t h SEC ate government agencies the essentiality of accountants, and procedure in applying A meeting with the full Commission for occupational classification. and numerous conferences with the staff The Certified Public Accountant 13 of the SEC have been held by Institute the chairman addressed a letter to each representatives during the current year. of the 155 committee members urging SEC releases on accounting and auditing that the services offered by the Institute matters are customarily reviewed by be brought to the attention of all non- technical committees of the Institute be­ member CPA’s in good standing. A fore their issuance. master list of prospective members has been compiled, and a pamphlet presenting B a n k r u p t c y the accomplishments and aims of the In­ The council approved a recommenda­ stitute and a brief history of the profes­ tion of the committee for a change in the sion has been supplied to committee mem­ rules of bankruptcy procedure which bers for distribution to persons eligible would permit the retention of accountants for membership. in bankruptcy proceedings on the same basis as that of other professional men. N a t u r a l B u s i n e s s Y e a r Arrangements were made in January C o o p e r a t io n w i t h S to c k E x c h a n g e s to eliminate from a bill introduced in the Technical questions submitted by the House a provision which would have re­ New York Stock Exchange have been quired enterprises to keep their accounts referred to the committee on accounting on a calendar-year basis. procedure for opinion. P u b l ic a t io n C ooperatives The Journal of Accountancy is com­ Conferences with groups representing pleting its 40th year. Circulation in cooperative organizations have been ar­ March reached 24,400, an increase of 14 ranged for discussions of problems of per cent in the past year. Almost two- accounting and terminology in this field. thirds of the subscribers are not mem­ bers of the Institute. Advertising revenue E d u c a t io n in the first seven months of the current The committee has arranged a confer­ fiscal year totaled $17,673, or 35 per cent ence with a cooperating committee of the more than in the corresponding months American Accounting Association in of the preceding fiscal year. Chicago in June at which will be dis­ cussed an outline of a program of activity P u b l ic I n f o r m a t io n drafted by an Institute committee which In cooperation with the Army and includes consideration of content of cur­ Navy, the public-information staff of the ricula, adult education, and other matters Institute arranged 14 war-contract of mutual interest. termination conferences sponsored by state societies of certified public account­ H ist o r y ants. The staff assisted the Massachusetts The committee continues to accumulate Society of Certified Public Accountants material relating to the history of the in planning a public dinner, on April accounting profession in the United States 23rd, in honor of Ira Mosher, president and recommends that arrangements be of the National Association of Manufac­ made in the near future for a digest and turers, and a member of the Massa­ compilation of material available. chusetts Society and the Institute. Many news items relating to activities of the M e m b e r s h ip Institute or its committees have been dis­ The committee reported a total of 8,678 tributed to the press. members and associates as of April 30th, an increase of 682 in the past six months, S o c ia l S e c u r it y from 42 states, the District of Columbia, At a meeting in Baltimore on Decem­ Hawaii, and Mexico. Late in December ber 9th, the committee conferred with 14 The Certified Public Accountant representatives of the Bureau of Old-Age sessions on problems of current interest, and Survivors’ Insurance regarding the has been drafted by the committee on Federal Old-Age and Survivors’ Insur­ technical sessions, and session chairmen ance Trust Fund. have been appointed. The council re­ solved that the president and secretary A n n u a l M e e t in g be empowered to cancel the meeting if A program for the 1945 annual meet­ wartime convention rules make it im­ ing, consisting principally of round-table possible to hold a meeting.

Election of Members

A labam a M inn e so t a *Douglass G. Jackson, Montgomery Arnold E. Gronvall, Minneapolis Carl E. Hallin, Minneapolis California Thomas D. Spaeth, St. Paul H. N. Bishop, Jr., San Francisco J. Marvin Eckles, Los Angeles M isso u r i *Forrest E. Knight, Stockton *Benedict D. Chaps, St. Louis Orville E. Helmich, St. Louis Connecticut Howard D. Hull, Kansas City John H. Venman, Bridgeport M o n t a n a F lorida *William E. Quigley, Jr., Butte *Edward G. Netscher, Tampa *John Rodney Renman, Great Falls Georgia N ew Y ork Henry W. Neill, Augusta Ronald J. Condon, New York I llinois *Philip K. Davis, Newburgh *Chester F. Becvar, Chicago *Howard H. Greenbaum, New York Francis H. Daft, Chicago *James A. Hanley, Buffalo *Frank J. Frech, Rockford †Henry J. Harder, New York Walter D. Hammar, Chicago Lambert S. Karch, New York Loyd C. Larson, Chicago *Joseph J. Lopinto, New York *Morris Schwartz, Chicago Samuel Padgug, New York *Leo G. Swinehart, Chicago †Hans D. Smith. New York *Richard E. Vollertsen, Chicago *S. Murray Solarsh, Brooklyn Bert B. Weinstein, Chicago †Clifford W. Wiendieck, New York *Alfred A. Wood, New York I n d ia n a *Max Schreier, Indianapolis N orth C arolina Robert E. Cunningham, Greensboro I owa Richard M. Hunter, Charlotte †H. D. Campbell, Jr., Des Moines N orth D akota K a n s a s R. D . Koppenhaver, Grand Forks Ira L. Houghton, Wichita *Joseph Douglas Stone, Wichita O h io Richard T. Baker, Cleveland K e n tu c k y Richard S. Burgess, Elyria *Arthur W. Adams, Louisville *Newell J. Elmore, Cincinnati *Jesse C. Paris, Lexington *Paul R. Foote, Cincinnati M assachusetts William R. Gerlach, Cleveland *Harold E. Hoskins, Cincinnati *John M . Sinclair, Boston *James A. Marohn, Wadsworth M ich ig a n *Donald M. Shawen, Findlay *James F. Forster, Detroit *Clark L. Simpson, Cincinnati George A. Payne, Grand Rapids Russell E. Smith, Cleveland A. T. Staeger, Detroit O regon *Zelva M. Poison, Portland †Advanced to membership. *Walter E. Wendt, Portland *Admitted as associates. Clarence W. Wray, Coos Bay The Certified Public Accountant 15

P ennsylvania U t a h *Keith L. Baker, Jr., Philadelphia *Glen S. Boyer, Salt Lake City *Darius Boyle, Pittsburgh *Leonard N. Petersen, Ogden Rowland Carr, Allentown *Alexei L. R. Kovner, Philadelphia *Samuel Landesman, Philadelphia V irg in ia *Howard E. Morgan, Philadelphia *Andrew W. Sykes, Norfolk Richard J. Oberfield, Philadelphia *Morris Ross, Philadelphia W a sh in g t o n *Otto E. Scherer, Philadelphia *William H. Holland, Walla Walla Howard T. Wenner, Philadelphia *Victor F. Knutzen, Seattle T e n n e ssee *Russel A. Pearson, Seattle †Thomas M. Dean, Memphis *Frank Pokorny, Seattle *Hazel J. Skog, Spokane T e x a s *John Henry Harkey, Jr., Houston O. F. Spear, Jr., San Antonio W isc o n sin *James D. Whitte, Houston *Leonard W . Zedler, Milwaukee

Three Sons in Uniform Gasoline Rations for Accountants Three sons of Marshall Crutcher of Some persons who perform account­ Ketchikan, Alaska, member of the Amer­ ing and legal services at essential estab­ ican Institute of Accountants, are now lishments, formerly eligible for the pre­ serving with the armed forces of the ferred gasoline rations issued in the form United States. The record is as follows: of “C” coupons, have been transferred to a new “semi-preferred” classification M. Bayard Crutcher, T/Sgt. U. S. Army. permitting a ceiling of 825 miles of travel Fred F. Crutcher Lt. (j.g.) USNR. monthly, under Amendment 181 to Ra­ Lewis P. Crutcher, Ensign, USNR. tion Order 5C which became effective May 1st. The purpose of this amend­ SEC Forms and Reports ment, described in greater detail in OPA release 5440 issued March 27th, is to An organization meeting of a panel reduce gasoline consumption and to committee appointed by the Advisory provide for more equitable issuance of sup­ Committee on Government Question­ plemental rations. It is designed particu­ naires to assist in its study of methods larly to assure greater uniformity of ac­ of simplifying SEC forms and reports tion by local war price and rationing was held at the offices of the American boards in issuing rations to persons who Institute of Accountants, April 12th. perform specialized services for war William M. Black of New York, repre­ plants but who are not employees of those senting the Institute, was named chair­ plants. Some classes of drivers formerly man of the panel committee. Other entitled to “C” coupons are now re­ members, previously appointed by the Ad­ stricted to “B” rations. visory Committee, which includes repre­ sentatives of both business and govern­ ment, are Harry A. Grube, representing Joseph C. Cobb of Houston, Texas, NACA; Fred W. Woods, Controllers died April 25th. Mr. Cobb was resident Institute; and Peyton Stapp of the Bu­ partner of Barrow, Wade, Guthrie & reau of the Budget. The panel committee Company, a CPA of Texas, and had been invites comments and suggestions relat­ a member of the American Institute of ing to the simplification of SEC forms Accountants since 1934. Mr. Cobb was a from members of the American Institute past president of the Texas Society of and other cooperating organizations. Certified Public Accountants. 16 The Certified Public Accountant

News About Institute Members State Society News L e g io n of M e r it Colonel Russell M. Riggins, of Bartles­ California Society of Certified Pub­ ville, Oklahoma, has been awarded the lic Accountants has published a 28- Legion of Merit by the War Department page pamphlet entitled Standard Audit in recognition of “exceptional meritorious Procedures for an Examination of the Fi­ service” performed from August 1, 1943 nancial Records of California Munici­ to August 1, 1944, while Chief of the palities. This pamphlet presents in out­ Control Branch, Field Service Division, line form a “master” program for the Ordnance Department, in planning and audit of a municipality, prepared by the developing a work-measurement stand­ committee on governmental auditing of ard for determining the efficiency of depot the California Society, following its study operations in the Ordnance Department. of problems relating to professional en­ The War Department citation reads as gagements with municipalities, counties, follows: and other governmental units in the state “For exceptional meritorious services of California. in the performance of outstanding ser­ Audits of counties and municipalities vices, from 1 August, 1943, to 1 August, required under recently enacted state 1944, Colonel Russell M. Riggins, legislation were considered at a meeting (0-145388) Army of the United States, arranged by Colorado Society’s legisla­ for the display of exceptional leadership tive committee on April 19th. A tenta­ in the development of work-measurement tive draft of a proposed audit program standards for determining the efficiency was discussed. The purpose of this meet­ of Army depot operations, thereby con­ ing was to clarify acceptable minimum tributing substantially to overcoming diffi­ cult problems of management and offering audit requirements in Colorado. guidance to inexperienced personnel Gold and silver medals awarded by whose recruitment became necessary Illinois Society to candidates receiving through increasing shortages of trained the highest and second highest grades in manpower. In applying principles of CPA examinations conducted by the sound business enterprise with vision and state board of examiners in November, tact, he so effectively made possible the 1944, were presented to Francis J. Wei­ use of man-hour values as a basis for tekamp and Miss Helen F. McGillicuddy, determining accomplishments that the programs of the Ordnance Department respectively, at a dinner meeting on were subsequently made standing operat­ April 16th. On the same occasion, Presi­ ing procedure for operations of depots dent Park Livingston of the Board of in all technical services under the Army Trustees of the University of Illinois Service Forces.” presented CPA certificates to 43 success­ ful candidates. W a r P r o d u c t io n B oard The committee on wartime and post­ Herman O. Corder was recently ap­ war problems of the New York State pointed Director of the Controller Divi­ Society of Certified Public Accountants sion, Program Controls Bureau, War recently approved a proposal that the Production Board. Before receiving this state taxation committee of the society appointment he was Chief of the Ac­ be asked to prepare a statement of the counting Systems Branch of the Con­ changes in the New York State tax law. troller Division for several years. This material would supplement chapters on federal taxation included in the re­ C h a m b e r of C o m m er c e fresher course of the American Institute J. E. Mitchell has been reelected a di­ of Accountants, described elsewhere in rector of the Newark (N. J.) Chamber this bulletin. of Commerce for a three-year term. THE CERTIFIED PUBLIC ACCOUNTANT A Bulletin of The A meri c a n Institute of Accountants

V ol. 25 J u n e , 1945 No. 6

Head of General Accounting Office Corporation Audit Division The Comptroller General of the United The new division in the General Ac­ States announced June 14th that Captain counting Office, which he will organize, T. Coleman Andrews, U.S.M.C.R., had is expected to be staffed by several hun­ been appointed head of the new corpora­ dred accountants with public accounting tion audit division of the General Ac­ experience, in addition to assistants counting Office to organize the auditing whose number cannot yet be estimated. of the federal government corporations The Institute is cooperating with the ‘‘in accordance with principles and pro­ Comptroller General in an effort to find cedures applicable to commercial corpo­ adequate personnel for the senior posi­ rate transactions,” as required by recent tions on this staff. legislation described in the April and May issues of this bulletin (See April, p. 2; May, p. 2). Captain Andrews was recalled from Secretary’s Notes active service in the Pacific, with the Di­ vision of Aviation of the United States Limitations of time and space pre­ Marine Corps, for tender of this new vented a full report of the Spring council post in the federal government. He has meeting in the May issue of this bulletin. been in the service for two and one-half Several matters of particular interest years. He is a certified public accountant deserve further mention. of Virginia, member of the American Institute of Accountants of which he P u b l ic U t il it y A c c o u n t in g was a member of council and the execu­ The report of the committee on public tive committee until joining the Marine utility accounting contained reference to Corps, and formerly served as chairman a concurring opinion of two members of of the Institute’s committee on govern­ the Federal Power Commission, in the mental accounting. matter of Montana Power Company, in He has been engaged in public ac­ which the testimony of several well counting practice in Virginia for the past known members of the accounting pro­ twenty-five years, and before entering fession, who appeared as expert witnes­ active military service had served in vol­ ses in the case, was severely criticized. unteer capacities in the offices of the After extended discussion of this incident Undersecretary of War and Undersecre­ the council adopted the following resolu­ tary of the Navy. tion :

PUBLISHED BY AMERICAN INSTITUTE PUBLISHING CO., INC. 13 East 41st Street, New York 17, N. Y. 2 The Certified Public Accountant

R esolved, That the council reiterates E l e c t io n of A u d it o r s its opinion that expressions of disinter­ In accordance with amendments to the ested accounting testimony in cases of public importance are in the general pub­ by-laws adopted last year, the council lic interest and should be encouraged; elected the firm of Alexander Grant & That the council, while expressing no Co. to audit the accounts of the Institute opinion at this time on the issues involved for the current fiscal year. in the case of the Montana Power Com­ pany, expresses its regret that certain A c c o u n t in g P rocedure members of the Federal Power Commis­ Following a report of the committee sion should at the hearing and in a con­ on accounting procedure, its chairman curring opinion have unjustly impugned the motives and integrity of witnesses raised the question whether the council who offered such testimony; believed that the activities of the com­ That the committee on accounting pro­ mittee had been conducted in a satisfac­ cedure be requested to report to the tory manner, particularly in view of executive committee on accounting issues criticism of some of its recent bulletins. arising in the Arkansas Power and Light Council adopted a motion expressing full Co. and in the Montana Power Company confidence in the methods of the commit­ cases in which the Federal Power Com­ tee on accounting procedure. mission and the state regulatory bodies reached different conclusions; C o m m it t e e R eports That copies of the report, when re­ ceived, be sent to all members of the Committee reports submitted to the Institute, to the Federal Power Com­ council which are of general interest to mission, the Arkansas Board of Public the membership, or deal with particularly Utilities, and the Montana Public Utility timely problems, are being reprinted in Commission. pamphlet form for distribution to all At a meeting later in May, the com­ members and associates. In view of the mittee on accounting procedure was in­ paper shortage, reports of less immediate formed of the resolution and approved interest will not be circulated generally appointment of a subcommittee to study at this time, but will appear in the next the accounting issues in the cases men­ edition of the Year Book. tioned and to draft a report for submis­ sion to the full committee. A u d it s of F ed er a l C orporations In accordance with a suggestion made L is t in g s i n D irec to r ies to the Comptroller General of the United Following the report of the committee States, which he received with evident on professional ethics, which referred to approval, the president of the Institute listings in directories, the council dis­ has appointed a special committee to cussed this question at some length. It cooperate, in a consulting capacity, with was proposed that the rules of profes­ the General Accounting Office in its task sional conduct be amended by the intro­ of formulating methods, procedures, and duction of a provision prohibiting mem­ programs for the audit of federal gov­ bers or associates from paying for a ernment corporations as required by listing in any directory, except that recent legislation. The Institute’s com­ purchase of additional listings in classi­ mittee consists of George P. Ellis, fied directories would be permitted in Chicago; Edward A. Kracke, New certain circumstances. The council ap­ York; and Leland G. Sutherland, New proved this proposal in principle and York. instructed the committee on professional A preliminary meeting of the Insti­ ethics to draft an amendment to the rules tute’s committee with officials of the Gen­ for submission to the membership of the eral Accounting Office is expected in the Institute. near future. The Certified Public Accountant 3

M e m b e r s h ip the members of the District of Columbia The activity of the committee on mem­ Institute for ideas and suggestions con­ bership is moving ahead at an accelerated cerning vocational guidance, educational pace, with very satisfactory accomplish­ facilities, and reemployment of returning ment. Since our last report a total of veterans. The American Institute offers 105 applications have been received from all possible assistance to these state 48 individual members of the committee, committees. the Chicago committeeman leading with 8 applications and Cleveland running a close second with 7. Six applications each have been received from the com­ Change in Selective Service mitteemen of Detroit and Memphis, with Rules Boston, Philadelphia, and Dallas each The widely publicized announce­ being credited with 5. The Ann Arbor, ment by Selective Service, May 23rd, Michigan, committee representative has of changes in draft policy, should sent in 4, and the Wichita, Minneapolis, not be taken as automatically defer­ Elizabeth (N. J.)., Oklahoma City, and ring all registrants 30 years of age Madison (Wisc.) committeemen have or over. Selective Service local each sent in 3. The remaining repre­ boards retain the power to order the sentatives from among the 48 committee induction of registrants over 30. A members have sent in 1 or 2 applications special warning is contained in the each for the period. Selective Service release that regis­ In addition, reports have been received trants over 30 who leave essential from members of the committee on mem­ jobs may be classified 1-A. Permis­ bership on approximately 750 nonmem­ sion of a draft board to change em­ bers, referred to them by the Institute staff, who for one reason or another have ployment is still required. However, National Selective Serv­ not applied for membership up to the present time. ice in its recent statement definitely Early in April the staff sent to all non­ encourages draft boards to defer member certified public accountants who registrants 30 to 37, especially if had received their certificates since June, they are fathers, if they are regularly 1943, a copy of the brochure which has engaged in activity in support of the national health, safety, and interest been mailed to all members, outlining the or useful to the community, or in an activities and purposes of the Institute, activity in war production or in an together with the membership require­ agricultural occupation or endeavor ments. As a result, 102 applications have been filed by these younger members of essential to the war effort. This the accounting profession in the two- gives the widest latitude to draft month period. boards and leaves them broad discre­ Total membership as we go to press tion in determining what occupa­ is 8,735. tions are useful. It appears to be in effect an invitation to draft boards C o m m it t e e s to A id V e t e r a n s to defer men over 30 who have regu­ Twenty-nine special committees have lar jobs in legitimate productive been appointed by presidents of state financial, business, or professional societies to assist accountants returning activities. from the armed forces. Many of these It is expected that occupational committees have held meetings for the deferment of registrants under 30 purpose of developing programs of activ­ will be granted only in the most un­ ity, and the committee appointed in the usual circumstances. District of Columbia has circularized all 4 The Certified Public Accountant

O f f ic e r s a n d S t a f f Samuel J. Broad, president of the Research Department Institute, has accepted an invitation to speak at the annual meeting of the Dominion Association of Chartered Ac­ C o m m it t e e o n A c c o u n t in g P rocedure countants at Winnipeg, August 21st and The May 15th-16th meeting of the 22nd. committee on accounting procedure was Edward B. Wilcox of Chicago, a vice- devoted to a consideration of a number president of the Institute, was a speaker of accounting problems having current at the annual meeting of California importance. Society of Certified Public Accountants In discussing the studies by the sub­ held in Los Angeles, on June 15th and 16th. committee on the income statement, the The secretary of the Institute addressed committee expressed the view that there the Illinois Society of Certified Public Ac­ are items which, by nature, should be countants at a meeting in Chicago, June charged or credited directly to earned 12th, at which the past presidents of the So­ surplus but it was agreed that full dis­ ciety were honored for their services to the closure of any items so treated is neces­ profession. He conveyed the greetings sary in connection with any published of the Institute to the New York Society annual statements of income for a period of Accountants at its 45th anniversary during which they occur. meeting, May 22nd. This organization, Subcommittees are to be appointed to composed of accountants and auditors in investigate these important postwar ques­ both public practice and private employ­ tions: How should currently useful and ment, has the distinction of having been valuable property, the cost of which has the first accounting society in the United been amortized on the books as permitted States to publish a periodical. under certificates of necessity for tax Carman G. Blough, director of re­ purposes, be reflected in the financial search, attended a meeting of the Amer­ statements of postwar years ? What ican Accounting Association’s executive recognition or disclosure, if any, should committee, of which he is a member, in be made of the fact in case properties Cincinnati on May 19th and 20th. He acquired after the termination of the war discussed “Developments in Accounting are purchased at prices not normally rep­ and Auditing” at the annual meeting of resentative of their basic economic Maryland Association of Certified Public worth? What costs, if any, of conversion Accountants in Baltimore, June 12th. to peacetime activities are chargeable to J. L. C. reserves which were set up by means of charges to costs of war business ? What Manpower Requirements Eased treatment shall be given to any unused balances that may be left in postwar Regional directors of the War Man­ reserves ? power Commission in 28 areas have been In a discussion of the proper classifica­ authorized to revoke the compulsory 48- tion of current assets and current liabil­ hour work week “upon finding that its ities, a proposal was made that a more continuance is no longer necessary to useful segregation of those items might alleviate labor shortages that are imped­ be provided by these divisions: Current ing the war effort,” according to an an­ Assets to include (a) Money Assets and nouncement by the chairman of the Com­ (b) Working Assets; Current Liabilities mission on May 17th. This action places to include (a) Working Liabilities and the 28 designated areas on the same basis (b) Other Current Liabilities. It was ex­ with all other parts of the country in this plained that if such a classification were respect. used it may be possible to distinguish The Certified Public Accountant 5 more clearly those current assets which groups in directing their attention to are accounted for upon a cost basis from problems of general accounting interest. those carried on a value basis, and that State and local organizations have an current liabilities arising from the important part in that work. The fol­ financing of current operations may be lowing notices are typical of reports more easily differentiated from liabilities received concerning the use of the pub­ which are current because of the time lications of the Institute’s committees as of their maturity. a basis for meeting discussions: The commmittee has been requested Maryland Association of Certified Pub­ by the council of the Institute to report lic Accountants, May 8 — Discussion to the executive committee upon the leaders: Charles W. Smith, Accounting accounting issues arising in the recent Research Bulletins Nos. 16, 20, 22; J. cases involving the Arkansas Power and Early Hardesty, Bulletin No. 23; and Light Company and the Montana Power J. C. Masson, Bulletin No. 22. Company. During the meeting, the com­ Oklahoma City Chapter of the Okla­ mittee approved answers to certain ques­ homa Society of Certified Public Ac­ tions on accounting principles submitted countants, May 11 — Discussion leader: by the Attorney General of the State George P. Ellis, Chicago, Accounting Research Bulletins Nos. 23 and 24 and of Arkansas, and it considered a draft Statements on Auditing Procedure No. 22. of a proposed report to the executive District of Columbia Institute of Cer­ committee upon the issues stated by the tified Public Accountants, May 18 — committee on public utility accounting Panel discussion of Bulletins Nos. 23 and to be involved in the Montana Power 24 and Statements Nos. 21 and 22. Company decisions. C a r m a n G. B l o u g h , Director of Research. P roposed A m e n d m e n t s to R e g u l a t io n S-X A number of the members of the Insti­ Educational Department tute have received letters from the ac­ counting staff of the Securities and Exchange Commission requesting their comment upon a proposed amendment to B oard of E x a m in e r s rule 5-03 of Regulation S-X relating to Subcommittees of the board of exam­ the manner of reporting income and iners have been active in the prepara­ affecting surplus items and the allocations tion of materials for future CPA exam­ of income taxes. As the proposed amend­ inations. The subcommittee on the ex­ ment carries far-reaching implications amination in accounting practice held a relative to the accountant’s reporting of meeting in New York on May 10th. The income, it is believed important that the subcommittee on auditing held a meeting views of the members of the Institute on June 1st. The examination for Novem­ should be brought to the attention of the ber, 1945, is practically complete and committee on accounting procedure. plans have been made for pretesting the Accordingly, members who have made problems. replies to the SEC’s request are invited The board has received a report of to send copies of their letters or other the replies to the questionnaire on the statements commenting on this question examination in accounting practice which to the research department. was sent out by the Association of Certi­ fied Public Accountant Examiners. An P rofessional D is c u s s io n s analysis of the replies will be published Development in the areas of account­ in the July issue of The Journal of ing theory and practice is the result of Accountancy. An editorial on prepara­ the continual effort of professional tion for CPA examinations in this same 6 The Certified Public Accountant issue discusses the broader phases of the 22nd-23rd, Members of the committees study. have been assigned various topics on the agenda. Albert W. Torbet will lead R e f r e s h e r C o u r se the discussion of college curricula in As this bulletin goes to press, orders accounting. Christopher H. Knoll will are on hand for 1977 copies of Con­ start the discussion of problems o*f staff temporary Accounting, the refresher education. Special attention will be given course for public accountants which will to the question of college programs for be published the latter part of July. The returning war veterans. orders came from veterans, public ac­ The Institute has inquired of a num­ countants, accountants with commercial ber of colleges concerning their plans and industrial concerns, and from for education and rehabilitation of re­ schools. The New Jersey Society of turning servicemen. Specific information Certified Public Accountants has ordered was requested on counseling services, copies for its members serving in the placement tests, use of general review armed forces. A number of firms have courses or special curricula, and credit placed orders for employees in service. for courses with the Armed Forces Insti­ Members of the Institute were notified tute or other study while serving in the about this course in advance of any gen­ armed forces. eral announcement. The first edition will The Institute recently assisted the be limited to 5,000 copies because of the Armed Forces Institute in the prepara­ scarcity of paper. Early orders are there­ tion of an occupational brief, “Preparing fore advisable. to Become a Certified Public Account­ After publication, plans will be consid­ ant.” This brief states the qualifications ered for offering the refresher - course and training necessary in preparation material in formal courses in a few of for the CPA examination. It lists the the larger cities of the country. Letters correspondence courses offered by the received from schools have indicated Armed Forces Institute for the study an interest in cooperation in the plans of accounting which might be pursued for day or night classes. The classes with profit by a candidate for the certif­ may be organized as short courses for icate. Copies of this brief may be a few weeks, or longer, depending upon obtained by writing the United States the extent to which the various sections Armed Forces Institute, Madison 3, of the material are to be covered. Organi­ Wisconsin. The AFI has a catalog zation of classes will be left to the edu­ which presents descriptive outlines of a cational institutions. The Institute will considerable number of accounting be pleased to cooperate with these schools courses at the collegiate level. It neither in preparing class outlines, interesting grants nor recommends the granting of public accountants in enrollment, and in academic credit for these courses. The making arrangements for lectures by its policy of granting credit varies among members on the subject matter of the different educational institutions. various chapters. A few firms have T h o m a s W. L e l a n d , stated their intention of using the Educational Director. refresher-course material in staff-train­ ing classes. Killed in Action Pvt. Richard F. Carpenter of Phila­ C o m m it t e e o n E d u c a t io n delphia, Pa., was killed in action on Janu­ A joint meeting of the Institute’s com­ ary 28, 1945. Pvt. Carpenter was a CPA mittee on education with a corresponding of Pennsylvania and became a member of committee of the American Accounting the American Institute of Accountants Association will be held in Chicago, June in 1944. The Certified Public Accountant 7

Public Information Department Wartime Conferences

P u b l ic it y Another series of annual wartime News releases referring to the recent accounting conferences conducted by series of wartime accounting conferences, state societies of certified public ac­ described elsewhere in this bulletin, were countants and their chapters, with furnished to financial editors of news­ the cooperation of the American In­ papers and to press associations. News­ stitute of Accountants, has just been papers in the conference cities and else­ completed. This program is a sub­ where published a substantial number of stitute for regional conferences of items featuring this program, in some in­ state societies which, it is hoped, will stances accompanied by photographs of be resumed after the war. members of the speakers’ party. Between May 28th and June 8th, Under the caption “Alice in Account­ a party of five speakers representing ing Land” the New York Wall Street the Institute visited Boston, New Journal commented, May 15th, on an Haven, Buffalo, Cleveland, Detroit, editorial entitled “OPA and Accepted Louisville, Indianapolis, and Rich­ Accounting Principles” which was pub­ mond. Sponsoring organizations lished in the May issue of The Journal were state societies of Massachusetts, Connecticut, Michigan, Kentucky, of Accountancy. The latter editorial em­ phasized the discrepancy between tax ac­ Indiana, and Virginia, Buffalo Chap­ counting and generally accepted account­ ter of New York State Society, and ing principles, and the tendency of tax Cleveland Chapter of Ohio Society. accounting to influence public thought. Speakers and their topics were This comment resulted from the regular Samuel J. Broad, president of the policy of sending to financial editors of American Institute: The Business of about 400 daily newspapers copies of Peace; Edward B. Wilcox, one of editorials and articles appearing in The the two vice-presidents: Social and Economic Trends Affecting Account­ Journal of Accountancy. At the request of a representative of ancy; Maurice Austin, chairman of The New York Times, an interview was the committee on federal taxation: arranged with a member of the American Taxes After Victory; Carman G. Institute to discuss recent developments Blough, director of research: Devel­ in contract - termination policies and opments in Accounting and Audit­ procedures of government agencies. ing; John L. Carey, secretary: The Accounting Profession’s New Op­ S p e a k e r s ’ B u r e a u portunity. Charles Melvoin, a mem­ Troy G. Thurston of Indianapolis, a ber of the committee on federal member of the Institute’s committee on taxation, presented Mr. Austin’s federal taxation, accepted an invitation paper at the Cleveland meeting. In to address the Evansville, Indiana, Rotary six of the eight cities visited Mr. Club on June 5th. Broad discussed current business George N. Farrand of the Office of problems in radio interviews with Contract Settlement, addressed the an­ leaders in banking and industry. nual meeting of Harrisburg Chapter of Combined attendance at all the Pennsylvania Institute, May 22nd, in conference sessions is estimated at place of Lt. Col. Victor Z. Brink, who 2,000, which includes bankers, credit was unable to fill this engagement. men, lawyers, and business exec­ F r a n k A. G a l e , utives, as well as accountants. Assistant Secretary. 8 The Certified Public Accountant

National Conference of Lawyers and Certified Public Accountants

The National Conference of Lawyers tax returns were prepared by certified and Certified Public Accountants held public accountants or lawyers; that law­ its third meeting at Washington, May 4, yers and certified public accountants 1945. This organization was formed a should recommend the services of mem­ little more than a year ago, under the bers of the other profession whenever auspices of the American Bar Associa­ they might be helpful to the client; that tion and the American Institute of accountants should not prepare legal Accountants. From time to time it has documents, but that lawyers should con­ announced its broad objectives and pol­ sult accountants when, in the preparation icies. of such documents, questions of account­ The basic purpose of the Conference ing arise. This resolution was communi­ is to consider mutual problems of lawyers cated to the House of Delegates of the and certified public accountants affecting American Bar Association and to the the interests of business and the general council of the American Institute of public. At its first meeting it adopted Accountants. the specific objectives of furthering the One subcommittee of the Conference development of professional standards, was requested to study the subject of encouraging cooperation between mem­ regulatory public accounting legislation. bers of the two professions, attempting As a result of its report, the Conference to correct misunderstandings between the at its latest meeting adopted a resolu­ two professions, expanding the useful­ tion approving in principle the form of ness to the public of both professions, and regulatory public accounting bill pre­ protecting the public against practice by pared by the American Institute of Ac­ unqualified persons. Subcommittees were countants committee on state legislation, appointed to study various specific prob­ and recommending that the Board of lems related to these objectives. Governors of the American Bar Asso­ At its second meeting the Conference ciation endorse this type of legislation. discussed at some length questions re­ Another subcommittee of the Con­ lated to the field of tax practice, in ference proposed a resolution, which the which members of both professions en­ Conference adopted, approving a course gage. The Conference recognized that in accounting for lawyers arranged in such questions are often of great com­ New York this spring by the Practising plexity because of the intermingling of Law Institute in cooperation with the law and accounting in income taxation. New York State Society of Certified It was agreed that the solution to prob­ Public Accountants, and recommending lems arising in this field would have that similar courses be arranged in to be gradual; that efforts to solve them other communities, so that members of should be based on the principle of co­ each profession might present and dis­ operation between lawyers and account­ cuss with members of the other matters ants in the best interests of their clients; of common interest. and that to this end the most construc­ As another step in its program of tive first step by the Conference would education, the Conference approved the be a program of education to bring to preparation of an article, for simultane­ each profession information about the ous publication in the journals of the other, and encourage mutual confidence legal and accounting professions, in as a basis for cooperative activity in which problems of business requiring actual practice. The Conference’s first coöordinated legal and accounting advice public expression on this subject was a would be discussed, and in which refer­ resolution expressing the opinion that ence would be made to the professional the public would be best served if income- standards prevailing in both fields. The Certified Public Accountant 9

The Conference plans to continue its ceiver, or trustee, or debtor in possession meetings twice a year and is developing shall have represented or holds any inter­ a program to encourage cooperative est adverse to the receiver, trustee, cred­ activity by local organizations of law­ itors, or stockholders in any matter upon which he is employed for such receiver, yers and certified public accountants, trustee, or debtor in possession, the which may be put into effect after the war. court may deny the allowance of any fee to such accountant, or the reim­ Recommendations for Amendment bursement of his expenses, or both, and of Bankruptcy Rules may also deny any allowance to the receiver, or trustee if it shall appear that At the suggestion of the committee on he failed to make diligent inquiry into bankruptcy the council of the American the connections of said accountant. Institute of Accountants, at its meeting No allowance of compensation shall May 2, 1945, recommended that rules of be made to any accountant for a receiver, bankruptcy be amended to read as fol­ trustee, or debtor in possession except lows : for professional services. The court may deny the allowance of A u c t io n e e r s a n d A p p r a is e r s any fee to the accountant, or the reim­ Rule 45. No auctioneer shall be em­ bursement of his expenses, or both, if ployed by a receiver, trustee, or debtor it shall appear that the accountant acted in possession except upon an order of in collusion with the bankrupt adversely the court expressly fixing the amount to the interest of the estate. of the compensation or the rate or measure thereof. The compensation of Unauthorized Confirmation appraisers shall be provided for in like Requests manner in the order appointing them. A n official of an eastern bank recently A p p o in t m e n t a n d wrote the Institute that his bank had re­ C ompensation of A c c o u n t a n t s ceived from various accounting firms re­ Rule 46. No accountant for a receiver, trustee, or debtor in possession shall be quests for the confirmation of bank appointed except upon an order of the balances, loans, and other confidential court, which shall be granted only upon data, bearing signatures of persons other the verified petition of the receiver, than those who, according to the bank’s trustee, or debtor in possession, stating records, were authorized to sign such the name of the accountant whom he requests. It was suggested that a great wishes to employ, the reasons for his deal of time and expense would be saved selection, and the professional services if accountants would see to it that confir­ he is to render, the necessity for employ­ mation requests were signed by persons ing an accountant at all, and to the best of the petitioner’s knowledge all of the having proper authority. The Institute’s accountant’s connections with the bank­ committee on cooperation with bankers rupt or debtor, the creditors, or any other expressed surprise at this report that pub­ party in interest, and their respective lic accountants had failed to obtain prop­ accountants. If satisfied that the account­ er signatures on confirmation requests. ant does not represent nor hold any Recognizing, however, that on some occa­ interest adverse to the receiver, the sions, officials of a client corporation trustee, or the estate in matters upon might thoughtlessly sign confirmation re­ which he is engaged, and that his em­ quests at the instance of an auditor, even ployment would be to the best interests though their signatures were not on file of the estate, the court may authorize his at the bank as “authorized” signatures, employment, and such employment shall be for specific purposes unless the court the committee recommended that the at­ is satisfied that the case is one justify­ tention of members be directed to this ing a general retainer. If, without dis­ matter through the columns of T h e closure, any accountant acting for a re­ C e r t if ie d P u b l ic A c c o u n t a n t . 10 The Certified Public Accountant

Lasser on Contract Termination Applications should be submitted to the Director of Personnel, UNRRA Head­ J. K. Lasser, author of Your Income quarters, Dupont Circle Building, Wash­ Tax and editor of “The Tax Clinic” in ington, D. C. The Journal of Accountancy, has just written a book entitled How to Speed Up Settlement of Your Terminated War Nominations — An Error Contracts, published by McGraw-Hill. It A list of states from which members of contains a complete statement of all laws, the Institute council are to be elected for regulations, forms, and reports relating to terms beginning with the fiscal year 1945- termination. Simple explanations, supple­ 1946 was published in the May issue of mented by check lists, tell both large and this bulletin. Through an unfortunate small contractors what to do when their error, Michigan and Missouri were omit­ contracts are terminated and how to con­ ted from this list. Both these states were duct negotiations with government agen­ selected, with the others listed, by a unani­ cies. Mr. Lasser has made a gift of his mous vote of the committee on nomina­ manuscript to the Benevolent Fund of the tions at its meeting on May 11th. Other American Institute of Accountants. The states from which council members will Fund will receive all royalties which be elected this year are California, Con­ would otherwise have been paid to the necticut, District of Columbia, Illinois, author. Indiana, Kansas, Kentucky, Maryland, Massachusetts, New York, North Caro­ UNRRA Needs Accountants lina, Tennessee, Utah, and Washington. All Institute members in the states desig­ The United Nations Relief and Re­ nated are urged to submit to the committee habilitation Administration has positions names of candidates for these nomina­ available in Europe for persons qualified tions. as accountants and financial officers. Ap­ plicants accepted will be assigned to as­ News About Institute Members sembly centers, area offices, or missions administering relief and rehabilitation R e p a r a t io n s C o m m is s io n services in liberated areas. They will be N. Loyall McLaren of San Francisco, responsible for maintaining a system of California, past president of the Ameri­ financial accounts and records, and ac­ can Institute of Accountants, has been counting for receipts and disbursements. appointed Senior Accounting Advisor to Salaries range from $3,000 to $5,800. Edwin W. Pauley, United States member Principal qualifications are: Age, 30 to of the Reparations Commission. Mr. Mc­ 40 years or, in exceptional cases, up to Laren, concurrently on inactive status as 50; good physical condition; responsible a Captain in the United States Naval Re­ administrative or professional experience. serve, is now in Europe for an indefinite College graduates are preferred. Knowl­ period with Mr. Pauley and his staff of edge of one language in addition to Eng­ technical experts. lish is desirable. A high degree of adapt­ ability and flexibility is essential. P ennsylvania T a x C o m m it t e e s Officers, warrant officers, and enlisted Clarence L. Turner of Philadelphia, a men or women in the United States Army, member of the American Institute’s com­ who are over thirty years of age and per­ mittee on federal taxation, has been re­ manently assigned to duty in this coun­ appointed vice-chairman of the Commit­ try, will be considered. Those to whom a tee on Taxation and Expenditures of the position is formally offered will be ex­ Pennsylvania State Chamber of Com­ pected to request their release in accord­ merce and chairman of a similar com­ ance with War Department regulations. mittee of the Chamber of Commerce and The Certified Public Accountant II

Board of Trade of Philadelphia. Mr. M inn eso ta Turner is also co-chairman of Group I Parker W. Brockway, Minneapolis of the Tax Advisory Committee formed Fred C. Cady, Minneapolis to submit a report on proposed revisions M issouri in the tax structure to the Joint State Isaac B. Flora, Kansas City Government Commission. *Thomas J. Smith, St. Louis N ew Jersey M a y o r o f W a c o Richard H. Ashton, Paterson Frank L. Wilcox of Waco, Texas, was Jerome S. Cossman, Newark David M. Drossman, Newark recently elected mayor of that city. Mr. *Jack A. Freeman, Newark Wilcox is also chairman of Waco Chap­ *Louis Lampert, Newark ter of the Texas Society of Certified Brenton T. Morse, Newark Public Accountants. David D. Ravitz, Newark N ew Y ork Election of Members †Gregory V. Collins, N e w York Max Golding, New York California Ernest B. Horwath, New York Francis H. Barnard, Los Angeles *Matthew F. Korn, Binghamton *Alwin W. Johnson, Beverly Hills Max L. Norchick, New York Connecticut *Karl C. Olsen, New York *Henry L. Katz, Bridgeport *Ferdinand J. Roeder, Buffalo George W. Meder, Bridgeport Everett C. Stromberg, New York *Herman H. Steiger, Stamford N orth Carolina D istrict of Colum bia Robert C. Carter, Raleigh *Robert W. Chapline, Washington O hio *John P. Creech, Washington Dale W. Black, Cleveland Thomas J. Cook, Cleveland Georgia *Howard B. Speyer, Toledo *Emmett F. Gardner, Atlanta William H. Morse, Douglas O k lah o m a †Lafayette A. Garner, Oklahoma City I llinois *Howard Allen, Chicago O regon *James D. Anderson, Chicago †Burton M. Smith, Portland *Stanley Matayoshi, Chicago P ennsylvania Carl H. Wasmuth, Chicago A. Warner Balen, Philadelphia I n d ia n a Abraham J. Epstein, Pittsburgh *Richard E. Strahlem, Indianapolis *Meyer S. Glasberg, Philadelphia †Samuel M. Jemison, Philadelphia IOWA *George T. Magee, Philadelphia Francis J. Harrigan, Des Moines *Michael Sowiski, Pittsburgh

K en tu c k y T ex as Holmes B. Hill, Louisville *Robert M. Allen, Dallas L o u is ia n a *William A. Harrison, Austin William P. Carr, New Orleans *George M. Hayes, Dallas Eugene F. Monnier, New Orleans *Justin Kimball, Houston V ermont M aryland *Isadore E. Levin, Baltimore *George M. Marrow, Brattleboro W a sh in g to n M assachusetts *Kenneth Owen, Seattle Leo A. Schmidt, Boston *Morris S. Pierson, Spokane M ic h ig a n *Jerome Weinstein, Seattle *William E. Crown, Jr., Detroit W isc o n sin Michael M. Wild, Detroit *Norman A. Baeb, Green Bay * Admitted as associates. *Charles A. Bolner, De Pere t Advanced to membership. *Vincent G. McDonagh, La Crosse 12 The Certified Public Accountant

State Accounting Legislation public interest, and calling his attention to the high standards for the practice of R eport on B ills I ntroduced public accountancy set forth in the bill. Alabama: S. 17, Accountants— to require the annual examination and audit by inde­ pendent competent accountants of the records Accounting and Business History and accounts of municipal corporations with populations of 6,000 or more. Emphasizing that accounting has been Florida: H. 983, Accountancy—Amend an important factor in the history and section 29, chapter 15,637, creating state board growth of business, the profession has of accountancy by prescribing term of work with registered accountant’s office necessary presented a collection of books to the to qualify for examination to become CPA; Business Historical Society at Baker H. 308, Public Accountants License—Re­ Library of the Harvard University quiring State Board of Accountancy to li­ Graduate School of Business Administra­ cense all public accountants who have been tion. The volumes are intended to be licensed each year since January 1, 1940; H. 410, Municipal Auditing—Amending sec­ useful to the Society, of which the Amer­ tion 167.61, Acts of 1941, and adding certain ican Institute is an affiliated member. sections to Chapter 167, Acts of 1941, by The American Institute has given five requiring each municipality to have an items. They are: Twenty-five Years of annual audit made of its financial affairs and establishing a uniform-report method for Accounting Responsibility, by George O. municipal reporting; S. 588, Certified Ac­ May, CPA; Accounting Evolution to countants—Requiring the State Board of 1900, and the Directory of Early Ameri­ Accountancy to license as certified account­ can Public Accountants, both by Profes­ ants all public accountants licensed each year since January 1, 1928. sor A. C. Littleton, CPA; Origin and Pennsylvania: S. 715, Legislative Auditor Evolution of Double Entry Bookkeeping, —Providing for a Legislative Auditor and by Edward Peragallo, CPA; and The for his election by the General Assembly; American Institute Fiftieth Anniversary defining his powers and duties; authorizing Celebration, the proceedings of the 1937 him to employ assistants; directing him to investigate all expenditures and disburse­ annual meeting. ments of the Assembly. Colonel Robert H. Montgomery has presented a copy of his Fifty Years of Regulatory Accounting Bills Accountancy to the Business Historical Society, and the Maryland Association of C. F. Milledge, president of the Texas Certified Public Accountants has given Society of Certified Public Accountants, a copy of its anniversary book, Forty has wired the Institute that both houses Years of Accountancy in Maryland. of the Texas Legislature have passed a regulatory bill sponsored by the Texas Society of Certified Public Accountants. H arold B. Godfrey of Billings, Mont., The signature of the Governor of Texas died March 3, 1945. Mr. Godfrey was the will make Texas the fifteenth state to senior member of the firm of Godfrey, enact regulatory legislation. Colberg & Wallin. He was a CPA of A regulatory bill conforming closely Montana and became a member of the to the form of regulatory public account­ American Institute of Accountants in ing bill approved by the Institute’s com­ 1935. mittee on state legislation has passed the Puerto Rico Legislature and has been Francis R. Roberts of Chicago, Ill., approved by the Governor of Puerto died May 5, 1945. Mr. Roberts, a former Rico. At the request of the Puerto Rico member of council and various commit­ Institute of Accountants, the American tees of the Institute, was a CPA of Mary­ Institute of Accountants wired Governor land and had been a member of the Rexford G. Tugwell, stating its belief American Institute of Accountants and that the pending legislation was in the predecessor organizations since 1912. t h e C e r t if ie d P u b l ic ACCOUNTANT A Bulletin of The American Institute of Accountants

V ol. 25 Ju l y , 1 945 No. 7

code of professional ethics. The co- Secretary’s Notes chairman of the Conference representing the American Bar Association will trans­

A n n u a l M e e t i n g mit information received, with a preface written by himself, to the appropriate Recent announcements by Federal local bar associations, with a suggestion Government officers indicate that increas­ that they publish it in their journals. ing demands on transportation facilities It is hoped that this will result in a will require continuation of the conven­ wider understanding among lawyers of tion ban well into the fall. In the cir­ the professional standards in account­ cumstances it seems highly doubtful ancy. whether the Institute will be able to The president of the Practising Law hold its annual meeting, scheduled for Institute has expressed gratification with October 22nd-25th at the Palmer House in the resolution of the National Conference Chicago. However, the hotel is reserving commending a course in accounting for the necessary space, a technical program lawyers which the Practising Law Insti­ has been outlined, and session chairmen tute arranged in New York last spring have been appointed, in the hope that in cooperation with the New York State conditions will change rapidly enough to Society and the American Institute. Con­ permit the meeting. The president and sideration will be given to the possibility secretary have been empowered by the of extending this type of course to other council to make the final decision on the areas. It is the hope of the Conference question, which will probably be an­ that arrangements can be made for lec­ nounced in August, in the light of chang­ tures by lawyers to professional account­ ing circumstances. A council meeting ing groups, as well as for continuation may be held in any event, but the exec­ of lectures by accountants before legal utive committee has not yet decided where. groups, on matters of mutual interest. The Milwaukee Chapter of the Wis­ C o o p e r a t io n W i t h L e g a l P r o f e s s io n consin Society and the Milwaukee Bar The National Conference of Lawyers Association have adopted an agreement and Certified Public Accountants has re­ based on resolutions of the National quested each state society to submit a Conference of Lawyers and Certified statement of the professional accounting Public Accountants. The preamble to standards maintained in its state; that is, the Milwaukee agreement refers to the the experience and educational require­ statement of principles adopted by rep­ ments for the CPA certificate and the resentatives of the American Bar Asso­

PUBLISHED BY AMERICAN INSTITUTE PUBLISHING CO., INC. 13 East 41st Street, New York 17, N. Y. 2 The Certified Public Accountant

ciation and the American Institute of be helpful to the client; and that neither Accountants (through the National Con­ profession should assume to perform the ference) and states that it is in the in­ function of the other. terests of the certified public accountants, “3. That certified public accountants the lawyers, and the public that a joint should not prepare legal documents such committee be formed to implement the as articles of incorporation, corporate by­ laws, contracts, deeds, trust agreements, purposes indicated. The first article of wills, and similar documents. Where in the agreement quotes from a resolution such documents questions of accountancy adopted by the Conference last fall, as am involved or may result, it is advisable follows: that certified public accountants be con­ “1. That the public will be best served sulted.” if income-tax returns are prepared either The second article of the agreement by certified public accountants or lawyers. provides for a Milwaukee committee con­ “2. That it is in the public interest sisting of three certified public account­ for lawyers to recommend the employ­ ment of certified public accountants and ants and three lawyers, members of the for certified public accountants to recom­ respective organizations, which will con­ mend the employment of lawyers in mat­ sider any matters referred to it by the ters where the services of either would two organizations and will seek to assist members of the two professions in an advisory capacity. CPA Examination Schedule Copies of the Milwaukee agreement have been sent to all state societies with State accounting boards adopting a request that the Institute be notified the uniform examinations prepared of any similar activity undertaken else­ by the American Institute of Ac­ where. countants will hold the regular fall examinations on November 7, 8, Cooperation W ith Bankers and 9, 1945, according to the fol­ Officials of the Robert Morris Associates lowing schedule: recently expressed an interest in obtain­ Wednesday, November 7th: 1:30 ing information about accounting sys­ to 6:00 P.M.—Accounting Prac­ tems for small businesses which might tice, Part I. be helpful to veterans seeking bank loans under the GI Bill of Rights for the Thursday, November 8th: 9:00 purpose of undertaking their own busi­ A.M. to 12:30 P.M.—Theory of nesses. The Institute’s research depart­ Accounts. ment compiled a list of all existing Thursday, November 8th: 1:30 to publications that it could find on record­ 6:00 P.M.—Accounting Practice, keeping for small businesses, which has been submitted with some explanatory Part II. text to the Robert Morris Associates. Friday, November 9th : 9:00 A.M. The material may be reprinted in the to 12:30 P.M.—Commercial Law Robert Morris Associates’ bulletin, and there are indications that some banks may Friday, November 9th: 1:30 P.M. reproduce it for transmittal to veterans to 5 :00 P.M.—Auditing who apply for loans. Dates for future examinations The Institute’s committee on coopera­ are listed below: tion with bankers is considering the de­ sirability of preparing a pamphlet for May 15, 16, and 17, 1946. the information of credit officers of November 6, 7, and 8, 1946 banks on the meaning of the accountant’s report. The cooperation of the research The Certified Public Accountant 3

department and the committee on audit­ associations has adopted a code of pro­ ing procedure would no doubt be sought. fessional conduct quite similar to those Such a pamphlet might be distributed maintained by the societies of certified widely through state societies and their public accountants. Several of these chapters. organizations maintain friendly relations with state societies of certified public P u b l ic A c c o u n t a n t O rganizations accountants. At least one state society, Colorado, The Institute has recently tried to find admits public accountants registered un­ out how many organizations of non­ der its two-class regulatory accounting certified public accountants are in ex­ law as associate members. istence. Replies to its inquiries so far The extent to which noncertified pub­ indicate that more or less well organized groups of noncertified public account­ lic accountants have organized seems to ants exist in California, Connecticut, have increased in recent years. At the same time there appears to have been Illinois, Minnesota, New York, Ohio, an increase in proposals for amendment Oklahoma, and Texas. Two local of existing CPA laws. The circumstances organizations of this kind have been lend weight to a comment by Frank G. reported, one in Madison, Wisconsin, Short, president of the California Society and one in Greenville, South Carolina. of Certified Public Accountants, in the Some of these organizations are limited June issue of the society’s bulletin. In to individuals engaged in public account­ discussing the legislative activity of the ing practice; others admit both public society during the year, he said: practitioners and privately employed accountants. “It is apparent that the profession Two state organizations, the Delaware has not done a good public - relations Accountants Association and the Kana­ job. Among the difficulties encountered wha Valley Accountants Association by the legislation committee was the fact that certified public accountants, (West Virginia), are strong local or­ as a group, are not well regarded by ganizations representing principally in­ many members of the legislature. Efforts dustrial accountants rather than public are being made to overcome this preju­ accountants. dice (which, to a considerable extent, Most of the public accountant groups is based upon false propaganda spread have legislative programs or, if they are by those who would reduce public not actively seeking legislation, they accountancy standards), but it is clear have at least an official policy on the that the profession has not been wise subject. Some of them are reported to in relying on the last-minute efforts of be in favor of two-class regulatory busy practitioners. A sound public-in­ accounting legislation of the type out­ formation program must be continuous if it is to be effective.” lined in the form of regulatory public accounting bill recently promulgated by P r a c t ic e i n F o r e ig n C o u n t r ie s the Institute’s committee on state legis­ lation. Others have proposed legislation Word has been received of the enact­ providing for the continuous registration ment of legislation in Mexico and of public accountants—in other words, Argentina which would severely restrict, creating a permanent second class of if it would not entirely prevent, the registered public accountants without practice of accounting in those countries interfering with the existing CPA law. by foreigners. Neither law has as yet Still other groups on occasion have been interpreted by regulations, and full indicated an interest in reopening the details are not available. According to waiver clause. the latest reports, the Cuban law enacted At least one of the public accountant last fall has not yet been fully inter­ 4 The Certified Public Accountant preted by regulations and its precise appointed at the request of Senator Byrd effect on the status of American account­ last winter, on proposed changes in ants in Cuba is not yet known. legislation relating to budgeting, account­ ing, auditing, and reporting for the A id t o V e t e r a n s Federal Government as a whole. A The Institute is communicating with meeting of the full committee to consider the several government organizations the subcommittee report is to be arranged. offering assistance to veterans returning Proposed legislation elaborating the to civilian life by offering its services, and provisions of the George bill regarding those of the 29 state society committees auditing of Federal Government cor­ on cooperation with veterans which have porations and, in addition, providing for recently been appointed, in directing financial control of such corporations by veterans interested in accounting to ap­ Congress, is expected to be reported out propriate sources of vocational guidance, of committee in the near future. George placement service, and training. The P. Ellis, chairman of the Institute’s Adjutant General’s Office Separation committee on governmental accounting, Centers, the Surgeon General’s Office of testified at the hearings on this proposed Reconditioning Service, The War Man­ legislation. power Commission and the United States O P A a n d A c c o u n t in g P r i n c i p l e s Employment Service, and the Veterans Administration are all interested in the Samuel J. Broad, president of the retraining and placement of returning Institute, replied in June to a request of veterans. As information is received the deputy administrator for accounting about local offices established by any or of the OPA for an opinion on accepted all of these agencies, the state society accounting principles in relation to cost committee will be advised. determination for purposes of price con­ trol. This subject had been debated at F e d e r a l G o v e r n m e n t A c c o u n t in g hearings before Congressional commit­ The appointment of Captain T. Cole­ tees on extension of the Emergency Price man Andrews as head of the General Control Act. The opinion was desired Accounting Office Corporation Audit particularly in relation to proposals that methods of accounting recognized for Division, announced in the June C e r t i­ income-tax purposes, for example, per­ f i e d P u b l ic A c c o u n t a n t , was widely noticed in the press and has been favor­ centage depletion, should be accepted by ably received in all interested quarters. OPA as the basis for determination of Captain Andrews has been engaged in costs. the initial task of building his staff, but W a r t im e A c c o u n t in g C o n f e r e n c e s it is expected that the work of auditing the Federal Government corporations The eight wartime accounting confer­ under the requirements of the George ences reported in the June issue of this bill will begin in the near future. A con­ bulletin were a source of much gratifica­ sulting committee appointed by the tion to the representatives of the Insti­ American Institute of Accountants is tute who participated in them. The expected to confer soon with Captain attendance was uniformly larger than Andrews and other officials of the Gen­ expected, and the general reaction to the eral Accounting Office. addresses of the Institute’s officials In the meantime, a subcommittee might fairly be described as enthusiastic. headed by Lloyd Morey, Illinois, has The success of these eight conferences, reported to the unofficial committee, the combined attendance at which ex­ consisting of Federal Government ac­ ceeded two thousand, has led to serious countants and Institute representatives, consideration of the question whether The Certified Public Accountant 5

conferences of this nature should be 1909, responded as senior on behalf of made a permanent part of the Institute’s the group. Others who were present program. Regional conferences, which included Ernest Reckitt, the seventh bring together accountants from a num­ president (1910-1911); Arthur Young, ber of states, serve a slightly different the ninth president (1912-1913); Robert purpose and are usually not held annu­ O. Berger, the eleventh president ally. It might be possible to schedule (1914-1915) ; and Harold Benington, the half-day programs, at which “traveling twelfth president (1915-1916). Mrs. panels” of Institute officials would speak, Allen R. Smart, widow of the first presi­ in areas in which regional conferences dent of the Illinois Society, accepted a were not being held in a given year. testimonial on behalf of her late husband, The friendly reception awaiting the as did Mrs. Edward E. Gore, widow Institute’s representatives this spring in of the third president. Miss Emma Lee Boston, New Haven, Buffalo, Cleveland, Walton, daughter of the late Seymour Detroit, Louisville, Indianapolis, and Walton, the fourth president, received Richmond was a pleasant indication of the testimonial to her father and D. G. the cordial relations which exist between Miller, nephew of the late Robert Payne, the state societies and the Institute. the thirtieth president, accepted the tes­ timonial to his uncle. There were 330 C oordination members and guests present at the dinner. The proposed program of coordination The secretary of the Institute, who made of activities of state and national organi­ a brief address following the presenta­ zations has been the subject of consider­ tion of the testimonials, suggested that ation during the spring and summer by the occasion was not only a fitting recog­ a committee of the Advisory Council of nition of the contribution which the State Society Presidents. A substantial leaders of the society in Illinois had majority of state societies has endorsed made to the advancement of the profes­ the plan in principle and indicated sion, but was in effect also an expression a willingness to contribute toward its of confidence in the policies and pro­ financing in the initial stages. The fessional standards which had been set Advisory Council committee is now con­ in the past. sidering the possibility of introducing the The Rhode Island Society of Certified program by successive stages rather than Public Accountants on June 19th held a attempting to launch it fully at one time. “Past Presidents' Night” at which past C. F. Milledge, chairman of the Advisory presidents were honored and those who Council, is drafting a tentative program, were able to be present made short ad­ which it is planned to discuss at a meeting dresses to the society. J. L. C. of representatives of the Advisory Coun­ cil and of the Institute in August. Sons of Institute Members

S o c ie t ie s H o n o r P a s t P r e s id e n t s with the Armed Forces The Illinois Society of Certified Pub­ James Lindsay Crane, Finance Officer, lic Accountants on June 12th held a 11th Airborne Division, U. S. Army; meeting for the purpose of honoring its and William H. Crane, Pfc., U. S. past presidents, which turned out to be Army (sons of H. C. Crane, Mont­ a notable occasion. There have been gomery, Ala.). 42 presidents of the society, of whom 11 Richard Currier Gove (son of James S. are deceased. Of the 31 living past presi­ Gove, Boston, M ass.)— Lt. (j.g.) dents, 27 were present at the meeting to USNR. receive engraved testimonials from the Rene Sumersille (son of A. Erle Sum­ society. W. Ernest Seatree, the fifth ersille, San Juan, Puerto Rico)—Ma­ past president, who held office in 1908- chinist’s Mate, U. S. Navy. 6 The Certified Public Accountant

Fayette H. Elwell, University of Wis­ Educational Department consin Sidney G. Winter, University of Iowa E. A. Heilman, University of Minnesota Harvey G. Meyer, University of Ten­ R e f r e s h e r C o u r s e nessee The publication date for Contemporary Ernest C. Davies, Northwestern Uni­ Accounting, the Institute’s refresher versity course for public accountants, has been moved forward to September. It now American Institute of Accountants appears that the number of pages will be John W. Queenan, Chicago, Chairman considerably greater than the first esti­ Albert W. Torbet, Chicago mate—probably running more than 700 William C. Waggoner, Chicago pages. Kenneth M. Montgomery, New York There is evidence of widespread in­ Raymond G. Ankers, New York terest in the publication. As this bulletin Thomas W. Leland, American Institute goes to press, orders have been received of Accountants for approximately 4,000 copies. Letters from a few public accounting firms de­ The agenda for the meeting had been clare an intention to use the material in prepared in advance and selected topics staff-training work. A few educational assigned members of the two committees institutions have inquired as to its use for discussion. Mr. Torbet presented a in formal classes. One chapter of a statement on education of accountants state society of certified public account­ and suggested subjects and semester ants and one chapter of the National hours for the accounting curriculum. Association of Cost Accountants have This suggested curriculum would con­ announced plans to use the book in stitute a major in economics and a minor special classes sponsored by the chapter. in accounting. In the discussion which An effort has been made to increase the followed, representatives of the Amer­ allotment of paper for the publication, ican Accounting Association expressed but without success. The present allot­ the opinion that this curriculum would ment of paper will permit the publication not provide a sufficient content in ac­ of not more than 6,000 copies. Thus, the counting subjects for a student interested first edition is expected to be exhausted in public accounting as a career and before the publication date. stated a preference for a curriculum which would permit a major in account­ C o m m it t e e o n E d u c a t io n ing. Mr. Torbet stressed the importance of thorough training in English, arith­ A joint meeting of the Institute’s com­ metic, and commercial law. He recom­ mittee on education and a special com­ mended that special attention be given in mittee of the American Accounting the law course to the matter of legal evi­ Association was held in Chicago on June dence. He also recommended collateral 22nd and 23rd. The following committee reading in addition to specified texts, and members and other representatives of the an arrangement permitting qualified stu­ two organizations attended: dents to take work in excess of mini­ American Accounting Association mum requirements. In the general discussion of this sub­ Henry Chamberlain, Loyola University; ject, representatives of the American Chairman Accounting Association stated that many William A. Paton, University of Michi­ of the best accounting students found gan employment in industrial and commer­ Hiram T. Scovill, University of Illinois cial accounting rather than public ac­ The Certified Public Accountant 7 counting. They attributed this situation Professor Paton presented an informal to the early visits of personnel officers discussion of the proposed pamphlet on of large corporations for the purpose of public accounting as a career. Many interviewing college seniors and to the constructive suggestions were received fact that such corporations made definite for the improvement of this pamphlet. offers and assured steady employment. The desirability of its wide distribution They stated that in too many cases repre­ was emphasized. It was specifically sentatives of the public accounting firms recommended that the information as came to the schools too late; that they to the work of public accountants should offered employment to begin in the fall be carried to high-school students and and would not promise a job beyond the high-school teachers. A state meeting of busy season. Of course, all these com­ commercial teachers was suggested as one ments relate to prewar conditions and means of reaching the high schools. not to the present situation of expanded Mr. Ankers led the discussion of staff demands for services of public account­ training and commented on the methods ants and reduced personnel. One or two of training used by different firms. of the men representing public account­ Both Mr. Montgomery and Mr. Queenan ing firms stated that they were well presented statements as to their experi­ pleased with the work of recent college ence in staff-training work. One of the graduates. The general recommendation most interesting phases of the discussion seemed to be that accounting majors dealt with the question as to the respec­ should devote more time to the study of tive roles of educational institutions and auditing and less time to specialized public accounting firms in the education accounting. of public accountants. The accounting Mr. Heilman presented a discussion teachers were of the opinion that ex­ of the quarter system used at the Uni­ tended training programs ought to be versity of Minnesota. Under this sys­ unnecessary for college graduates who tem, the school arranges with public majored in accounting. accounting firms for the employment of Three special committees were ap­ college seniors in a ten to twelve-week pointed as follows: period between the end of December and the last of March, each year. These Committee on auditing materials— students are rescruited by the public R. G. Ankers, chairman; A. W. Torbet, accounting firms through interviews in S. G. Winter, and E. C. Davies. This early fall. They receive pay at junior committee was asked to study the prob­ lem of obtaining audit programs, inter­ rates and do the work which is generally nal-check questionnaires, working pa­ done by staff men of junior rank. The pers, and similar materials which would school requires a report, and the student assist teachers of classes in auditing. is graded on his work with the public Committee to prepare statement on accounting firm. There is no obligation educational standards for accounting— on the part of the student to accept H. T. Scovill, chairman; W. A. Paton, employment in public accounting after F. H. Elwell, K. M. Montgomery, graduation, but in a majority of cases and T. W. Leland. This committee was students have found employment with requested to study the possibility of set­ the firms to which they were assigned ting minimum standards which might be for training. Mr. Heilman stated that used in judging whether or not schools one public accounting firm took students offered acceptable courses for preparing students for entry into the accounting in their junior year and used them profession. The Institute receives many again in the senior year. A similar calls for a list of good accounting schools arrangement for junior students had but at present there is very little objec­ been made with a limited number of tive information available to provide industrial concerns. criteria for judging the adequacy of the 8 The Certified Public Accountant

courses of any given institution. Estab­ lished standards covering courses and Public Information Department hours, texts, and teaching personnel would be very helpful in answering these requests. It was pointed out that for A n d r e w s A p p o i n t m e n t many years the medical and legal pro­ fessions have used lists of accredited Washington was the focal point for schools. one activity of the public information de­ Committee on bibliography — E. A. partment late in June. The work involved Heilman was named chairman of this cooperation in securing wide news pub­ committee and John W. Queenan was licity for the appointment of Capt. T. appointed to assist him. The committee Coleman Andrews, U.S.M.C.R., of Rich­ was requested to survey the available mond, Virginia, formerly a member of accounting texts, and books for use as council and of the executive committee collateral reading, and to make a service­ able list for use of accounting teachers of the American Institute of Account­ arid public accountants. ants, as Director of Corporation Audits of the General Accounting Office. The meeting was the first joint meet­ ing of representatives of the Institute as News memoranda outlining the back­ the national organization of certified ground of the position and reviewing the public accountants and the American professional and war career of Captain Accounting Association, representing pri­ Andrews were sent to the Washington marily accounting teachers. bureaus of the Associated Press, United Press, International News Service, T h o m a s W. L e l a n d , Educational Director. Scripps-Howard Newspaper Alliance; of important daily newspapers; and of Business Week, Newsweek, and Time. Assistant Director for Pricing The same memoranda were sent to the Harry E. Howell of Providence, Rhode news editors of all important radio-chain Island, a member of the American In­ outlets in the capital. stitute of Accountants who has served Announcements of the Andrews ap­ on several of its committees, has recently pointment were published in the New been appointed Assistant Director for York Times, the New York World-Tele­ Pricing, Purchases Division, Headquar­ gram, the Washington Post, and else­ ters, Army Service Forces, and has been where. Several Washington correspond­ designated in the Office of the Under ents, following receipt of the American Secretary of War to represent the Army Institute memoranda, made arrangements Air Forces in a similar capacity. Mr. to interview Captain Andrews. More de­ Howell will thus be in charge of pricing tails appeared in the June issue of this policies affecting all War Department bulletin. procurement, supervising activities of The Richmond Times-Dispatch, on both Army Service Forces and Army June 16th, quoted President A. Frank Air Forces relating to individual contract Stewart of the Virginia Society of Pub­ prices and coordination of price control lic Accountants, as follows: “I consider and rationing between the War Depart­ the selection of Captain Andrews to head ment and the Office of Price Administra­ this important task to be a great honor tion. Since July, 1944, when he resigned to our city and state. He is admirably from an executive position in private in­ equipped by personality, training, and dustry, Mr. Howell has been Chief of the experience to assume the great respon­ Policy Branch, Purchases Division, sibilities of this office, which I am con­ Headquarters, Army Service Forces. He fident he will discharge with credit to is a past president of the National Asso­ himself and to the new organization ciation of Cost Accountants. which he will form to do the work.” The Certified Public Accountant 9

In an editorial entitled “The Man for V e t e r a n s ’ C o m m it t e e s the Job,” appearing in the same issue, The Institute continued to furnish the Times-Dispatch commented as fol­ lows: “United States Comptroller Gen­ to state societies standard news releases eral Lindsay Warren has chosen wisely to be used by them in announcing to their in naming T. Coleman Andrews of Rich­ state papers appointment of committees mond to fill the new post of Director of on cooperation with veterans. To date Corporation Audits, established in the this standard release, which is ready for General Accounting Office. . . . The mailing to daily papers, has been distrib­ task before him is one for which he is uted by twenty-eight societies. Clippings admirably suited and which badly needs so far received show that this release has doing." appeared in 43 newspapers in 37 cities of The assistant secretary in charge of 20 states, and the District of Columbia. the public information department visited an editor of The Saturday Evening Post “C o öp e r a t iv e C l i n i c s ” to convey basic information about the Early in July, American Institute mem­ projected Federal-Government corpora­ bers in four states received an announce­ tion audits which can serve as source ment of a series of “cooperative clinics” material for an editorial in that maga­ to be held on the West Coast in July and zine, if one is to be published. early August, of which the Institute’s committee on cooperatives is a co­ W a r t im e A c c o u n t in g C o n f e r e n c e s sponsor. A memorandum was prepared Clippings showing press references to for the Associated Press bureau in the recent series of wartime accounting Buffalo to serve as the basis for a news conferences held by state society groups announcement of the clinics by Walter in eight states and addressed by officers L. Bradley of that city, chairman of the and other representatives of the Amer­ committee. ican Institute were reproduced and F r a n k A. G a l e , mailed early in July to members of the Assistant Secretary. conference-speakers’ party; to presidents and conference-committee chairmen of state society groups; and to members of Bronze Star Medal council of the Institute. Clippings actu­ Major George F. Fischer of Colum­ ally received represent a total of 19 bus, Ohio, assistant fiscal officer at head­ columns in 35 newspapers of 24 cities quarters of the Air Technical Service in 10 states. Command in Europe, has been awarded President Samuel J. Broad, using a the Bronze Star Medal in recognition of standard script prepared by the public his “keen sense of fiscal responsibility, information department, broadcast an energetic ability, and superlative faculty interview on public problems of the day for administrative organization.” Ac­ from radio stations in six of the eight cording to the citation, Major Fischer cities where wartime accounting confer­ “conceived and instituted a system of ences were held. control of obligated funds for all Air Force activities in the European theater W o m e n i n A c c o u n t a n c y of operations” and “further, prepared In June the Institute was visited by a two exemplary studies of fiscal procedure member of the staff of Mademoiselle, of the air and naval forces of Great a magazine for young women. She asked Britain which have proved to be ex­ for and received facts about women in tremely valuable to higher headquarters accountancy, and was directed to other in planning for current fiscal and finance sources of information on this subject. activities of the United States Army.” 10 The Certified Public Accountant

memorandum on these concepts for pub­ Research Department lication. Census of Manufactures T he I ncome Statement Representatives of the Bureau of the The subcommittee on the income state­ Budget and the Bureau of Census met ment met, June 15th, with the chairman with three members of the committee on of the committee on accounting procedure auditing procedure on June 8th. This to discuss a tentative report which had informal meeting was held to discuss cer­ been drafted for the consideration of tain problems relating to the design of the subcommittee. Following the meet­ a questionnaire to be used in the forth­ ing, the report was redrafted and is now coming Census of Manufactures. The being reviewed by subcommittee mem­ bureaus represented were concerned with bers. One of the important problems to framing questions relating to expendi­ which the report directs attention is that tures for fixed tangible assets to provide of concepts of income. the most useful data which could be con­ veniently obtained from accounting “The question of what constitutes the records. most practically useful concept of income for the year is one on which there is Charges and Credits to Surplus much difference of opinion resulting in A departmental survey of 410 annual wide differences in practice. One of the corporate reports for fiscal periods end­ concepts is that the net income for the year should be measured by deducting ing subsequent to July 1, 1944, indicates from the accumulated net income at the that 178 corporations reported direct end of the year the amount accumulated charges or credits to earned surplus, at the beginning of the year. Another, other than for transfers from the income and an entirely different concept, is one account and dividends. Excluding one which emphasizes the relationship of items company which effected a quasi-reorgani­ to the operations and to the year exclud­ zation during the period and another ing from the income account any impor­ reorganized under the National Bank­ tant items which are not so related.” ruptcy Act, a summary of the items re­ Two members of the subcommittee on ported by 176 corporations may be made the income statement are preparing a as follows: Number of Surplus Items Companies Debit Credit Prior years’ federal income and excess-profits taxes and state taxes (payments, refunds, claims, provisions, etc.) 36 13 27 Renegotiation (payments, refunds, claims, reserves, etc.) 23 22 2 Capital stock (changes in par or stated value, premiums on redemption, expenses of redemption or issue, treasury 39 45 4 Intangibles (goodwill, goodwill of subsidiaries, patents, etc.) ...... 13 15 0 Pensions (past-service payments or reserves for an­ nuities, etc.)...... 11 11 0 Debt retirement (premiums, expenses, elimination of dis­ counts, etc.)...... 7 7 0 Fixed-asset adjustments (depreciations, depletion, capitali­ ization of disallowed repairs, development expense, etc.) 21 7 14 Statutory reserves for foreign subsidiaries...... 4 4 0 Excess of cost over book value of subsidiary shares at acquisition ...... 8 8 0 The Certified Public Accountant II

Number of Surplus Items Companies Debit Credit Disposals of fixed assets (sales, losses, condemnations, expropriations, etc.)...... 13 6 7 Consolidation adjustments (subsidiaries included or ex­ cluded from consolidation, etc.)...... 22 9 14 Transfers to and from reserves...... 51 13 42 Miscellaneous and unidentified...... 35 12 26 172 136

Surplus items transferred from or to Foreign-exchange adjust­ reserves were identified as affecting the ments ...... 1 2 following: 1944 New York State Surplus franchise - tax adjust­ Reserve for______Debit Credit ments ...... 2 0 Investment and securities 1 12 Change in method of in­ Contingencies...... 2 6 ventory valuation...... 0 1 Foreign gains and losses. 1 2 Adjustment of accrued in­ Inventories ...... 2 2 terest in prior years Advances, notes, doubtful under stock plans----- 1 0 accounts, etc...... 1 5 Claims under cost-plus Treasury stock...... 0 1 contracts written off. 1 0 Deposits in closed banks. 0 3 Dividends canceled...... 0 1 Reconversion ...... 0 1 Claim against the United Insurance ...... 2 1 States written off----- 1 0 Postwar ...... 2 1 Sales of investments----- 0 1 Fixed assets...... 0 1 Refund of metal duties Replacements...... 0 1 paid ...... 0 1 Premiums ...... 1 0 Waiver of account pay­ Patents ...... 0 1 able to employee...... 0 1 Pledged collateral...... 0 1 Restoration of royalty Sinking fund...... 1 0 0 1 Unrealized losses...... 0 1 expense ...... Loss ...... 0 1 Tax savings from sale of Unidentified ...... 1 2 assets by subsidiary and pension-plan payments 0 2 13 42 Reported as “miscellane­ ous," “sundry,” “re­ Other, or miscellaneous, charges or funds,” etc., or as omni­ credits to earned surplus were reported bus items...... 2 9 as arising: 26 Surplus 12 ______From______Debit Credit Contingent, W ar, and P ostwar Appraisal surplus and ap­ Reserves praisals of fixed assets 1 2 Replacement of “lifo” in­ The 410 reports analyzed above also ventories ...... 2 0 reveal that 164 companies provided for Adjustment of operating additional contingency, war, or postwar income ...... 0 1 reserves by 171 charges reported in the Recognition of cash-sur­ income statement. render value of life in­ surance ...... 0 1 Charges for the reserve additions were Revaluation of invest­ reflected in these sections of the income ments ...... 1 3 statement: 12 The Certified Public Accountant

Number of items unproductive exploration, etc. (3), and Reported Additional income-tax payments (2). Sales of gross income (shown C a r m a n G. B l o u g h , as a special deduction). . . . 1 Director of Research. Operating costs or expenses 34* Other income or deductions 21 Accounting Legislation Taxes and other deductions 11 J. A. Phillips, chairman of the legis­ Other appropriations, deduc­ tions, or provisions...... 103 lative committee of the Texas Society of Existence and amount of Certified Public Accountants, has advised charge revealed only by a that the accountancy bill supported by footnote to the statement... 1 the Texas Society and by the noncertified accountants was passed by the Texas 171 legislature on June 4, 1945, and was signed by Governor Stevenson on June 6, *24 companies using this classification pre­ 1945. The original Texas Accountancy sented single-step statements. Act was passed in 1915 and was un­ A precise classification of the reserve changed until repealed by the adoption accounts affected is difficult because of of a new two-class restrictive act. The the use of combined titles such as Re­ new accountancy act will be published in serve for Contingencies and War Costs, an early issue of The Texas Accountant, etc. The following summary groups the official publication of the Texas Society. accounts according to the title or caption The American Institute has received apparently emphasized, indicating par­ information that a regulatory accounting enthetically other titles or explanations bill has been passed by the California contained in footnotes or elsewhere in legislature and has gone to the governor the report: for signature. The California Society Number of Certified Public Accountants has re­ Contingencies ...... 80 quested its members to write the gov­ Renegotiation (4), Inventory ernor and urge him to sign the bill. It Losses (3), W ar Costs (8). is reported, however, that a few certified Postwar Adjustments — Postwar public accountants oppose this legislation. Contingencies...... 57 The California bill creates a new board Inventory Losses (5), War of public accounting, consisting of seven Costs (8), Rehabilitation (2). certified public accountants, and pro­ Costs Arising Out of War—War vides for an administrative committee, Conditions ...... 14 consisting of public accountants, whose Inventory Losses (3), Termi­ nation Costs (1). function is to pass on applications for Reconversion — Transfer to registration and regulate practice of Peacetime Operations...... 16 public accountants. The bill contains a Termination Costs (1), Rene­ definition of public accounting. It does gotiation (1), Rehabilitation (3). not provide for registration of foreign Miscellaneous and omnibus (in­ accountants, but foreign accountants cluding captions as Reserve for and certified public accountants of other Bad Debts, Contingencies, etc.) 4 states may freely engage in casual practice in California pursuant to their 171 regular engagements. Provision is made In some reports noted, the financial for registration of state employees at statements, auditor’s report, or president’s the civil-service level of senior account­ message, indicated charges to the re­ ant or higher and for registration of serves. The following were typical: In­ returning veterans as public account­ ventory losses (2), Renegotiation refunds ants. Except for the above provisions (9), Prospecting, research, development, and certain administrative provisions The Certified Public Accountant 13

peculiar to California, it is reported that and Walter L. Bradley, chairman of the the bill follows closely the form of regu­ American Institute’s committee on latory public accounting bill approved by cooperatives, will preside as co-chairmen. the Institute’s committee on state legis­ Clinics in the Pacific Coast area will lation. open in Los Angeles on July 23rd; fol­ lowed by programs at Fresno and Berke­ News from State Boards ley, California, on July 25th and 27th, respectively; Seattle, July 31st; Port­ I n d ia n a land or Hood River, Oregon, August 1st; O. L. Hayes of Indianapolis has been Boise, Idaho, August 2nd; and Salt Lake appointed a member of the State Board City, August 3rd. It is expected that of Certified Accountants for a two-year similar programs will be arranged in the term. fall in midwestern, southern, and north­ eastern cities. M o n t a n a William B. Finlay of Great Falls has been appointed a member of the State Board of Examiners in Accountancy, Institute Library succeeding C. Howard Walden of The following letter, recently re­ Helena. ceived from an associate of the Insti­ N e w Y o r k tute who is the controller of a Joseph I. Lubin of New York, N. Y., company manufacturing farm and has been appointed a member of the industrial machinery, indicates one State Board of Certified Public Account­ of the many services which the ant Examiners for a five-year term. library of the American Institute of Accountants is equipped to perform: R h o d e I s l a n d Russell Harrington and W. B. M. “We have received the material which you sent to us in reply to our Miller of Providence have been appointed request for assistance with our de­ members of the State Board of Account­ velopment of an accounting system ancy, succeeding Abraham Blackman and for our Transportation Department. Chester R . Union at the expiration of The material received was in ac­ their six-year terms. cordance with the list set forth in your letter to us. “When we asked for assistance, Clinics on Coöperatives we did not expect that it would be so A series of one-day “coöperative clin­ thorough and complete as that which you have rendered us. If we cannot ics” sponsored jointly by the Farm Credit devise a satisfactory accounting sys­ Administration, the American Institute tem for our Transportation Depart­ of Cooperation, the legal and tax com­ ment from the material which you mittees of the National Council of furnished us, then there must cer­ Farmer Cooperatives, and the commit­ tainly be something wrong here. . . . tee on cooperatives of the American In­ “It is becoming increasingly clear stitute of Accountants will be conducted to me that associateship in the Insti­ in various sections of the country within tute is a privilege which is becoming the next few months. At these meetings invaluable to me.” tax questions, accounting records, re­ Facilities of the Institute library ports to Federal Government agencies, are constantly available to all Insti­ and other problems of interest to various tute members and associates. Vol­ types of cooperatives will be discussed. umes, pamphlets, reports, and manu­ Dr. Raymond W. Miller, president of scripts are available for circulation. the American Institute of Cooperation, 14 The Certified Public Accountant

Election of Members L o u is ia n a *Joseph W. Head, Shreveport A la b a m a *John C. McRae, Birmingham M aryland †Joseph L. Ullman, Birmingham *Francis R. D. Mayne, Baltimore Aaron Smelkinson, Baltimore C a l ifo r n ia

Walter Ben Finkel, Los Angeles M assachusetts Charles N. Poulson, Los Angeles *Carrol M. Sanger, Los Angeles Irving Chernoff, Boston James W. Corrigan, Boston C olorado Joseph M. Murphy, Boston Jack W. Kingsolver, Colorado Springs *Abe H. Permut, Denver M ic h ig a n George M. White, Colorado Springs *Robert L. Johnson, Ann Arbor Lawrence V. Messersmith, Detroit C o n n e c t ic u t Stanley J. Newton, Monroe Stanley A. Miller, Willimantic Charles E. Stilec, Detroit

D is t r ic t of C o l u m b ia M is s is s ip p i *Tull Ryall, Washington *A. Elizabeth Peck, Meridian

F lorida M is s o u r i *Jean Carr Brawner, Jacksonville †Henry W. Ford, Kansas City *George B. McC. Curry, Jr., St. Petersburg Henry R. Franz, St. Louis William O. Walton, Miami Kenneth B. Hardy, St Louis Jack R. Winterburn, Jacksonville Wm. H. McCormick, Kansas City Daniel P. Williams, St. Louis Georgia *James K. Boatwright, LaGrange M o n t a n a *Ben W. Brannon, Atlanta *Roy L. Ward, Atlanta *Robert L. Watkins, Helena

I l l in o is N e w J ersey *George C. Brook, Chicago Isadore Attinger, New Brunswick *Alden H. Christianson, Chicago *Aaron Wein, Jersey City *Wayne E. Dymond, Decatur *David F. Goodman, Decatur N e w Y ork Edward D. Jacks, Chicago Harold E. Kuehl, Chicago Morris Altman, New York *Arthur J. Leary, Chicago Frederick H. Bottger, Syracuse Edward P. Lee, Chicago *Daniel I. Cohen, New York Anthony J. Mann, Chicago *John F. Conroy, New York Howard F. Pratt, Chicago *William Henn, New York *Richard L. Shearer, Chicago Irving A. Herschman, New York *Hans J. Shield, Chicago *Amos T. Humphrey, New York *Irving Tenner, Chicago *Murray M. Kimmel, New York *Louis Kornbluh, New York I n d ia n a *Alfred C. Lange, New York S. Jay Lasser, New York *Edward J. Dowd, Indianapolis Vincent S. McBrien, New York *James E. McMullen, Niagara Falls IOWA *Nicholas J. Mead, New York *Leonard W. Gallagher, Des Moines Barnet M. Putterman, New York *Matthew Jay Ritchie, Brooklyn K a n s a s Abraham A. Schnee, New York *Louis Walker, New York *David H. Tripp, Wichita Oscar Wind, New York * Admitted as associates. *Kurt Windler, New York † Advanced to membership. *Milton Zipper, New York The Certified Public Accountant 15

O h io Wilford A. Beesley of Salt Lake City, Ralph H. Ballinger, Cleveland Utah, died June 6, 1945. Mr. Beesley Lionel F. Bradmiller, Dayton was a CPA of Utah and a former presi­ Robert G. Burns, Cleveland dent of the Utah Association of Certified Claire X. Davis, Dayton Public Accountants. He became a mem­ O k l a h o m a ber of the American Institute of Frank H. Ephraim, Oklahoma City Accountants in 1922.

O regon Thomas A. McCormack of Mil­ *Glen R. McDaniel, Portland waukee, Wis., died May 31, 1945. Mr. *William T. Miller, Portland McCormack was a CPA of Wisconsin and became a member of the American P ennsylvania Institute of Accountants in 1927. Edward D. Ashman, Pittsburgh Murray M. Axelrod, Philadelphia James B. McGuckin of Philadelphia, *Joseph M. Baxter, Philadelphia Michael E. Drayer, Philadelphia Pa., died recently. Mr. McGuckin was *Lawrence C. Harris, Philadelphia a CPA of Pennsylvania and became a *Robert M. Hayes, Pittsburgh member of the American Institute of Joseph H. Nolin, Philadelphia Accountants in 1927. *Frank S. Rittman, Wilmerding T e n n e s s e e Leonard H. Conant *James C. Parham, Memphis Leonard H. Conant of East Orange, T e x a s N. J., a member of the American Insti­ Frank T. Allen, Houston tute of Accountants and predecessor or­ Bryan T. Billups, Dallas *Irving H. Bloch, Dallas ganizations since 1893, died June 10th Claude Collard, Fort Worth at the age of 89. A descendant of Roger C. Lee Connell, Dallas Conant, first governor of the Massachu­ *Henry M. Ferguson, Dallas setts Bay Colony, he was a pioneer in Sidney M. Lewis, Houston Sidney L. Mooberry, Dallas the accounting profession and a leader in an early movement for consolidation W a s h in g t o n of the national professional societies of *George C. Roberts, Tacoma certified public accountants in the United States. Mr. Conant held CPA certificate W e s t V ir g in ia No. 3 issued by the State of New York *Charles M. Swart, Wheeling in 1896, and certificate No. 15 issued by the State of New Jersey in 1904. He was W is c o n s in president of the American Association Vernon F. Houghton, Madison *Arthur A. Zimmerman, Madison of Public Accountants from 1899 to 1901; a member of the New York State A l a s k a Board of Examiners from 1900 to *Elmer G. Johnson, Ketchikan 1903; vice-president of the New York State Society of Certified Public Ac­ countants in 1899, and again from 1903 Warren E. Banks of Hot Springs, to 1906; and secretary of the New Jersey Ark., died May 31, 1945. Mr. Banks was Society of Certified Public Accountants a CPA of Arkansas, a member of the from 1898 to 1903. For 48 years prior Arkansas State Board of Accountancy, to his retirement from L. H. Conant & and had been a member of the American Co. in 1936, he was continuously engaged Institute of Accountants since 1935. He in public accounting practice in New also served on the Institute's committee York, most of this time under his own on membership from 1937 to 1941. name. The Certified Public Accountant

Benefits of Membership in State and National Societies State Society News Emphasizing the advantage to certified public accountants of membership in Massachusetts and New Jersey their state and national professional or­ Societies, in coöperation with the War ganizations, J. Leonard Penny, retiring and Navy Departments and other gov­ president of the Illinois Society of Cer­ ernment agencies, recently sponsored tified Public Accountants, made the fol­ four-hour work sessions to assist war lowing comment in the June, 1945, issue contractors in preparing termination of the Society’s Bulletin: claims and settlement proposals. At the “Most persons who obtain certificates request of the Detroit Ordnance District, as certified public accountants should Michigan Association’s wartime prob­ deem it a privilege and a duty, as well lems committee has reviewed a standard as a pleasure, to seek membership not form of report used by the District’s field only in our state society but in our na­ auditors in reporting their surveys of tional society—the American Institute accounting procedures and systems of of Accountants. All who are familiar with the facts know that the state and internal control in war contractors’ plants. national societies have played a major Washington Society’s war activities part in the development so far made by committee has discussed contract-termina­ the profession of accounting. You are tion problems with the Contract Ter­ urged, therefore, to do your part in ex­ mination Executive Committee of the tending the membership and influence of Seattle District and the Smaller War both, since much progress is still to be Plants Corporation on several occasions. made. Minnesota Society recently prepared “Membership in these societies should a memorandum to assist employers in not be passive, for members should forci­ bly realize that in doing their part by complying with detailed requirements of attending meetings, accepting service the Old Age and Survivors’ Insurance on committees, etc., they are not only provisions of the Social Security Act accepting their proper responsibilities but and, thus, to reduce the cost incurred by are personally gaining in two respects. the government in administering this First, they are assisting in the improve­ legislation. At the invitation of the ment of the profession, which will re­ Superintendent of Public Instruction, the act to their benefit, and second, they are chairman of Michigan Association’s afforded the opportunity of making ac­ committee on cooperation and aid to vet­ quaintances and friends and of learning erans attended a recent meeting at which from work with the accounting, auditing, and related problems which the profes­ educational facilities for returning vet­ sional societies are seeking to solve.” erans wishing to qualify for administra­ tive positions in industry were discussed by representatives of the Veterans Ad­ Members of the Institute ministration, Michigan colleges, and other in War Activities state organizations. Enoch Pratt Library in Baltimore re­ Arthur C. Meade, Baltimore, Md.—Com­ cently announced a substantial gift from mander, SC, USNR. the Maryland Association for the pur­ R. Warner Ring, Miami, Fla.—Com­ chase of outstanding current books in mander, USNR. accounting. In 1932 the Association Fladger F. Tannery, Austin, Texas— transferred to the Pratt Library its 324 Colonel, Army Air Forces. Chief, volumes, thus making them more Field Headquarters Office, Contract accessible for students and businessmen. Audit Division; and Commanding Of­ Subsequent annual contributions have ficer, 6th AAF Base Unit. enlarged this collection. THE C e r t if ie d P u b l ic A c c o u n t a n t A Bulletin of The American Institute of Accountants

V o l. 25 A u g u s t, 1945 No. 8

Recommendations of Nominating J Regulatory Legislation Committee C a l if o r n ia J. Robert McCoy, president of the Cali­ The report of the nominating committee fornia Society of Certified Public Ac­ recommends the election of the follow­ countants, has informed the Institute that ing members to serve as members of the Governor Warren, after a public hearing, council of the Institute: approved the regulatory accounting bill passed by the California legislature. Three-year term: Apart from administrative provisions George O. Carlson, California peculiar to California, and certain other Lewis Lilly, California items mentioned below, the bill follows J. William Hope, Connecticut closely in fundamental respects the Insti­ Cyril Talbot, Illinois tute’s form of. regulatory public account­ Charlton N. Carter, Indiana William H. Moberly, Kansas ing bill. The bill contains a definition of Samuel W. Eskew, Kentucky public accounting. After six months from Edward J. Stegman, Maryland the effective date it prohibits persons not Raymond D. Willard, Massachusetts holding a permit to practice public ac­ Donald M. Russell, Michigan countancy from engaging in practice. Parry Barnes, Missouri However, there is a specific provision for Saul Levy, New York temporary practice within the state by a George E. Perrin, North Carolina certified public accountant or public ac­ J. Homer Hardy, Tennessee countant of another state and by foreign Lincoln G. Kelly, Utah accountants, provided that such practice R. C. Mounsey, Washington is incidental to regular practice in an­ One-year term: other state or country. The bill does not authorize the use of Lawrence O. Manley, District of Columbia the term “registered public accountant” or the letters “RPA.” It does allow public Recommendations of the nominating accountants to use the letters “PA.” Pro­ committee for election of officers, as an­ visions are made for registration of public nounced in T h e C e r t if ie d P u b l ic accountants as follows: A c c o u n t a n t in May, are: T. Dwight 1. Persons engaged in practice at the Williams, President; Homer N. Sweet and time of enactment of the legislation. Earl A . Waldo, Vice-presidents; Maurice 2. Persons serving in the armed forces E. Peloubet, Treasurer. of the United States, provided regis­

COPYRIGHT 1945 BY AMERICAN INSTITUTE OF ACCOUNTANTS 13 East 41st Street, New York 17, N. Y. 2 The Certified Public Accountant

tration is completed within a period qualifications. Applicants who pass the of 12 months after leaving the ser­ examination receive their certificates as vice. certified public accountants upon comple­ 3. Persons who have been engaged for tion of experience ranging from three to at least two years in governmental four years in public accounting or equiva­ or private accounting or auditing or lent private or governmental accounting. in the supervision of governmental The years of required experience may be or private accounting or auditing in reduced by one year in the case of college a position for which an examination in accountancy or qualifying experi­ graduates with courses of a specified ence in accounting is required com­ content in accounting and related sub­ parable to that required for specified jects. grades by the State of California. The bill contains a provision for the 4. Persons who have completed a issuance of reciprocal certificates as certi­ recognized course in accounting as fied public accountants and permits regis­ students in residence or by corre­ tration as public accountants of persons spondence and have had at least three whose applications for reciprocal certifi­ years’ experience in public account­ cates are pending. ing. I l l in o is The number of persons qualified to reg­ ister as public accountants under this bill The Institute has been informed that would undoubtedly be considerably in ex­ Illinois bill No. 149 has been killed. This cess of the number who would qualify to bill would have permitted the issuance of register under comparable provisions of certified public accountant certificates to the Institute’s form of regulatory public public accountants of Illinois who hold accounting bill. Both bills make the class unrevoked certificates of registration as of public accountants a temporary class in public accountants. the sense that there is no provision for The National Conference of Lawyers continuing registration of new public ac­ and Certified Public Accountants, acting countants, the purpose being ultimately through David F. Maxwell, co-chairman, to require the certificate of certified pub­ gave effective support in opposition to the lic accountant for admission to the prac­ bill. tice of public accounting. News About Institute Members The act creates a new state board of accountancy consisting of seven members. F o r e ig n E c o n o m ic A dministration Provision is made for the appointment by William M. Black of New York was the board of an administrative committee recently appointed by the Foreign Eco­ of public accountants whose function will nomic Administration as chairman of a be to pass on the applications of public mission, composed of seven members, to accountants for registration and to regu­ investigate and activate lend-lease activi­ late practice of public accountants. The ties in the United Kingdom. Mr. Black, board is given power to prescribe rules now in England for this purpose, has also of professional conduct for the profession been elected a member of the council and and every person holding a permit to of the executive committee of the United practice will be governed and controlled States Associates, International Chamber by these rules and standards. of Commerce. The examination for the certified pub­ lic accountant certificate is open to high- H e a d s Two A c c o u n t in g G r o u p s school graduates who have completed Nicholas Picchione of Providence, two years’ courses of study of college Rhode Island, president of Rhode Island grade or graduated from a junior college Society of Certified Public Accountants, of recognized standing. However, the was recently elected president of Prov­ board has power to accept equivalent idence Chapter, NACA. The Certified Public Accountant 3

Secretary’s Notes Annual Meeting Canceled On authority of council, the presi­ P rofessional R equirements dent of the American Institute of for V e t e r a n s Accountants has notified its mem­ On August first the New York press bers and associates that the annual reported that the Court of Appeals had meeting of the Institute, scheduled modified requirements for admission to to be held in Chicago, October the bar applicable to veterans. The most 23-25, 1945, has been canceled in important modification eliminates the bar accordance with the rules of the examinations for an individual who en­ Office of Defense Transportation. tered the armed forces after receiving The ODT had advised the Institute his law-school degree from a recognized that there was no likelihood that institution, but before taking the exam­ the convention rules would be mod­ inations, and who has been in active ified materially before the end of service for at least a year and resided in the year. It is planned to hold the New York for at least six months before scheduled meeting of the council of induction. Proposals of a similar nature the Institute on October 21st at the have already been made with respect to Palmer House, Chicago, in accord­ accountants who are war veterans, and the ance with ODT rules which now Institute has received inquiries concerning permit meetings attended by not the possibility of a comparable revision in more than 150 persons from outside the requirements for admission to the ac­ the city where the meeting is held, counting profession. and prior to an official announce­ Subsequent to the recent announcement ment on August 16th limited such of modified requirements for admission to attendance to 50 persons. the New York Bar, the following com­ With the advice of counsel and ment appeared in a letter to the editor of recommendation of the executive The New York Times which was pub­ committee, the council has voted by lished in that newspaper on August 7th: mail to instruct the president to “In view of the fact that the New York submit to all members of the Insti­ State Bar Association has deemed it ad­ tute a report of the committee on visable to dispense with the formality of nominations with a mail ballot for examinations for graduates of law school the election of officers, members by virtue of performing at least one year of council, and five members of the of duty in the armed forces, it is sug­ committee on nominations for the gested that some corresponding privilege fiscal year 1945-1946. be extended to graduates of accredited It seems probable that the Ad­ accounting schools.” visory Council of State Society An editorial in The Journal of Account­ Presidents will not hold a meeting ancy for January, 1945, took the position this fall. that, while there was a unanimous dispo­ No decision has as yet been made sition to assist veterans in every possible whether the Association of CPA way to meet professional requirements, it Examiners will hold a meeting. would not be in the public interest nor, in the long run, a favor to the veterans themselves to give them professional Court of Appeals has, in effect, opened degrees or licenses without the customary the door to a considerable number of evidence of their professional qualifica­ lawyers to offer their services to the tions made available through examina­ public without providing any means by tions. It appears that the New York which the public can distinguish between 4 The Certified Public Accountant those who have given evidence of quali­ A u d it s of G o v e r n m e n t C orporations fications to practice law under accepted standards, and those who have not. An advisory committee of the Institute There has already been some discussion appointed to consult with the new Division of the possibility of giving credits against of Corporation Audits headed by T. Cole­ the education and experience requirements man Andrews, in the General Accounting to veterans whose experience in the Office, was invited to meet with GAO armed forces may be presumed to have representatives on July 13th at Washing­ ton. The Institute representatives were strengthened their abilities to practice accounting. Samuel J. Broad, president; George P. Ellis; E. A. Kracke; Leland G. Suther­ The subject will doubtless be given careful consideration by examining land; and the secretary. Principal sub­ jects of discussion were personnel prob­ boards. Members of the Institute are in­ vited to submit their views. lems and technical procedures which might be utilized in fulfilling the objec­ tives of the George bill requiring audits C ertification of T a x a b l e I n c o m e by the General Accounting Office of fed­ In an address before the Massachusetts eral government corporations in accord­ Society of Certified Public Accountants ance with commercial audit principles. in Boston last spring, Ira Mosher, presi­ dent of the National Association of Manu­ C oordination facturers, and himself a certified public The development of a specific program accountant, said: of coordination of activities of the state societies and the Institute is progressing, “I suggest that, unless and until the though travel difficulties and pressure of certified public accountant’s examination is accepted by the Treasury Department other matters have delayed final conclu­ as a basis for final tax accounting, this sions. The fact that the Advisory Council government of ours cannot function effec­ of State Society Presidents may not tively, economically, and fairly to all have a meeting this fall might possibly taxpayers. No untrained, politically in­ cause further delay, but in any case, the fluenced group can possibly equip itself continued difficulties in securing staff to do this job, and high taxes are with personnel to carry out the program would us for our lifetimes.” hardly permit the launching of a full program at this time. Interest in the The same suggestion was made by a taxpayers’ organization in a communica­ project continues to be high. The presi­ tion to the House Ways and Means Com­ dent of the Washington Society of Cer­ mittee about a year ago. It came up for tified Public Accountants, Albert Moss, discussion before the Advisory Commit­ recently referred to the coordination pro­ tee of State Society Presidents at the posal as follows: St. Louis meeting in 1944. The general “The objectives of the program as sentiment seemed to be that until tax stated therein are: (1) to bring full in­ accounting could be brought more nearly formation about professional affairs of into conformity with generally accepted local and national interest to every mem­ accounting principles it would be diffi­ ber of the society; (2) to assist state cult, if not impossible, for certified public societies in improving their operating accountants to accept the responsibility procedures; (3) to bring the full influ­ of expressing an opinion as to the fair­ ence of the whole profession to bear in the solution of problems involving legis­ ness of reported taxable income. Mr. lation or general public relations. The Mosher’s position lends considerable Washington Society is deeply indebted weight to his proposal, however, and the to the Institute for the splendid leader­ subject may deserve further considera­ ship it has given to the profession over tion. the years. A strong national organization The Certified Public Accountant 5

in these changing times is paramount and Banking and Currency Committee, and the Washington Society should continue I was wondering if you have any com­ to give unstinted support to the Institute.” ment on that. “A. No, I have not read the article. It M e m b e r s h ip has been referred to my attention but I Since our last report on the activity of have not had the time to examine it. However, percentage depletion is an the committee on membership, individual established accounting method in the bitu­ members of the commitee have devoted minous coal mining industry and I would much time and effort to the membership- take issue with anyone who says it is not. promotion program. As a result, 113 ap­ “Q. I was not attempting to deny that plications have been received, 77 of which for the moment. I was simply pointing have been personally submitted by mem­ out that the recognized Journal of bers of the committee. The remaining 46 Accountancy, without any axe to grind, have been filed by members of the profes­ agreed almost 100 per cent with Mr. sion who have received their CPA certifi­ Green’s statement as to what should and cates in the past two years, after having should not be included in the determina­ received a copy of the brochure outlining tion of costs. the activities and purposes of the Insti­ “A. Well, we can certainly bring plenty tute. Edward L. Pitt, committee member of expert accountants and I do not know in Cleveland, who has sent in 11 applica­ but what we could get an article in The tions since our last published report, has Journal of Accountancy to support our the largest total number to his credit since position also.” the inauguration of the program six months ago, having submitted a total of E x e c u t iv e C o m m it t e e 22 applications in this period. A meeting of the Institute executive Approximately 2,000 names of non­ committee is scheduled in New York on members have been referred to the mem­ September 10th. bers of the committee, and reports have been made on about 1,000 certified public O f f ic e r s a n d S t a f f accountants who for one reason or an­ Maurice Austin, chairman of the Insti­ other have not applied for membership tute’s committee on federal taxation, re­ up to the present time. Many have indi­ cently proposed to tax authorities a revi­ cated an interest in membership at a sion in the interim tax bill, H. R. 3633, future date. as it was introduced in Congress. Total membership at this time is 8,919. Originally, this bill provided for an in­ crease in the excess-profits tax specific T h e J o u r n a l of A c c o u n t a n c y exemption from $10,000 to $25,000 ap­ C it e d i n C o n g r ess plicable only to taxable years beginning after December 31, 1945, but afforded no In hearings before the House Commit­ relief for fiscal-year taxpayers. Mr. tee on Banking and Currency on the Austin suggested that the increased ex­ extension of the Price Control and emption should also be available for Stabilization Act the following colloquy 1945-46 fiscal-year taxpayers on a pro occurred: rata basis. The substance of this pro­ “Q. The reason I asked that question posal was incorporated in section 2(a) was that in the May issue of The Journal (1) of the interim tax bill as it was of Accountancy [pp. 345-6], which, as enacted. you know, is the official organ of the American Institute of Accountants, there A lecture on the “Effect of SEC and was a statement which was very high in Treasury Department Policies on the praise of the statement made by Mr. Application of Accounting Principles” Green on this point before the Senate presented by Carman G. Blough, director 6 The Certified Public Accountant of research, at the Practising Law Insti­ ture last spring was reprinted in the June Educational Department issue of The New York Certified Public Accountant.

Paul J. Graber, research assistant, is R e f r e s h e r C o u r se the author of an article entitled “Time Contemporary Accounting, the Insti­ to Review Accounting Language and tute’s refresher course for public account­ Profit Story” in Trusts and Estates for ants is expected to be available late in July. Mr. Graber’s article on “The September. Orders for 5,800 copies have Analysis of Corporate Financial Data” been received. was published in the June issue of The An encouraging response has been re­ Southwestern Social Science Quarterly. ceived to the suggestion that the subject J. L. C. matter covered in the refresher course be presented in formal courses at educa­ Tax Court Examination Postponed tional institutions and that state societies To relieve overburdened transportation of certified public accountants should co­ facilities, the Tax Court of the United operate in arrangements for, and the States has postponed until April 10, 1946, conduct of, these courses. the examination for admission to practice The Virginia Society of Public Ac­ scheduled for September 12, 1945. countants has voted to sponsor courses for returning veterans and staff account­ ants. Arrangements have been made with the Director of the Evening School of CPA Examination Schedule the University of Richmond to include an State accounting boards adopting 18-weeks’ course, with one session per the uniform examinations, prepared week, in the accounting curriculum for by the American Institute of Ac­ the two semesters of 1945-46. The So­ countants, will hold the regular fall ciety plans to cooperate with the school in examinations in November, 1945, ac­ the selection of an instructor to take cording to the following schedule: responsibility for the course and will sup­ ply five lecturers, each to conduct one Wednesday, November 7th: 1:30 to section of the course. A. Frank Stewart, 6 :00 P.M. — Accounting Practice, president of the Virginia Society, who Part I. had charge of these arrangements, re­ ports that similar arrangements are un­ Thursday, November 8th: 9:00 A.M. der way for other courses to be offered at to 12:30 P. M. — Theory of Ac­ Norfolk and Roanoke. counts. Perry Mason, Acting Dean of the Thursday, November 8th: 1:30 to School of Business Administration, Uni­ 6 :00 P.M. — Accounting Practice, versity of California, is considering plans Part II. to organize a noncredit course, or discus­ Friday, November 9th: 9:00 A.M. to sion group. He and William K. Schmelzle, Director of the Business Administration 12:30 P.M. — Commercial Law. Courses in the Extension Division, have Friday, November 9th: 1:30 to 5 :00 called upon several of the public account­ P. M. — Auditing. ing firms in San Francisco and have Dates for future examinations fol­ found them to be interested in the forma­ low: tion of a class of this type. Tentative plans favor two evening meetings a week May 15, 16, and 17, 1946. for ten weeks, and a repetition of the November 6, 7, and 8, 1946. courses as long as interest continues. Dis­ cussion leaders will be selected from the The Certified Public Accountant 7

profession and from the university staff. time of graduation from college or when Enrollments in the course will be ac­ they first seek employment in professional cepted at the beginning of any of the accounting. The latter test is ready for five major groups of topics. a tryout and the former will be ready Clem W. Collins, Dean of the School within the next month. of Commerce, Accounts, and Finance of The committee decided to designate the the University of Denver, plans to use test of general aptitude for the study of the course as a text this fall. The arrange­ accounting as an orientation test, select­ ments for the course will be made in co­ ing this name in preference to intelligence operation with the education committee test or aptitude test. The purpose of of the Colorado Society. this test was stated to be a measurement The Seattle Chapter of the Washington of mental capacity in an accounting di­ Society of Certified Public Accountants rection. The orientation test will be a is considering a study course for staff good measure of general intelligence but members and ex-servicemen. Letters re­ it will be slanted toward mathematical ceived from New York University, the relationships and business. Pennsylvania State College, and other Henry E. Mendes, speaking as chair­ schools show an interest in the publica­ man of the board of examiners, indicated tion and a desire to offer a course if a sat­ that the board would develop objective isfactory enrollment can be obtained. The tests at the CPA level as a separate specific arrangements for hours and project. It was decided that the research nights of meeting, and the decision as to project might obtain its tests at the ad­ the number of chapters of the text which vanced level by adapting tests that had will be covered in a specific course, may previously been used in CPA examina­ be varied to suit the needs of enrollees. tions. It was also decided that, in any Some of the larger public accounting event, the committee would await develop­ firms are planning staff-training groups, ments of the board of examiners in this to study Contemporary Accounting. respect before preparing original ques­ tions at the advanced level. S e l e c t io n of P e r s o n n e l The committee on selection of personnel The committee on selection of person­ agreed that the primary consideration nel met on July 23rd. in the development of objective tests by The third report summarizing the ac­ the research project should be their use tivities of the project office from April as an aid in the employment practices of 15, 1945, to July 15, 1945, presented and members of the Institute and that college discussed by Dr. Ben D. Wood, stated participation in the use of the Strong that further scoring services had been interest test, the orientation test, and the rendered in connection with the Strong elementary and intermediate achievement Vocational Interest Blank for Men. The tests should be invited on this basis. The total number of blanks scored to date is committee members expressed the opin­ 2,003. Norms have been developed for ion that the advanced tests prepared under 27 scales based on scores of 200 partners, their direction would be helpful to em­ 200 managers, 200 senior accountans, 200 ployers in determining an employee’s semi-senior accountants, and 200 junior qualifications for advancement. accountants, and for a total of 1,000 cases of public accountants in general. CPA E xaminations The report also indicated that consid­ Thirty-five states, the District of Co­ erable progress had been made in the lumbia, and two territories cooperated in construction of tests of general aptitude the use of the uniform CPA examination for the study of accounting, and achieve­ in May, 1945. Seven cooperating states ment tests at the intermediate level to be and two cooperating territories did not administered to accounting majors at the offer examinations. 8 The Certified Public Accountant

A total of 1,557 candidates sat for the L abo r -M a n a g e m e n t R e l a t io n s examination. Papers of 953 candidates Wide circulation was given to an edi­ were graded by the chief examiner of the Institute and his staff. torial in the July issue of The Journal of Accountancy, entitled “Accounting and The following is a report of candidates passing and failing each of the four sub­ Labor-Management Negotiations,” which jects in the May, 1945, examination and offered the suggestion that accounting be the previous examination held in No­ utilized in determining and clearly pre­ senting the basic facts relating to points vember, 1944: at issue in negotiations or disputes be­ May, 1945 November, 1944 tween labor and management. It offered Number % Number % the further suggestion that a certified Auditing public accountant be appointed to a com­ Passed 118 24.4 318 60.5 mittee reported as being formed for the Failed 366 75.6 208 39.5 purpose of putting into effect the re­ Graded 484 100.0 526 100.0 cently announced “Charter for Labor and Law Management.” Passed 142 26.7 275 46.6 Printed copies of the editorial were Failed 390 73.3 315 53.4 sent with a letter to the chief editors of Graded 532 100.0 590 100.0 398 daily newspapers; to the editors of Theory eighty-one national and local labor pub­ Passed 315 66.2 457 78.3 lications, and of fifty-eight chamber of Failed 161 33.8 126 21.7 commerce members’ bulletins. Others to Graded 476 100.0 583 100.0 whom the editorial and letter were sent Practice include William Green of the American Passed 119 12.8 134 13.9 Federation of Labor, Philip Murray of Failed 811 87.2 833 86.1 the Congress of Industrial Organizations, Graded 930 100.0 967 100.0 and Eric A. Johnston of the Chamber of Commerce of the United States. T h o m a s W. L e l a n d , Educational Director. F e d er a l C o r po r a t io n A u d it s Public Information Department Early in August, the assistant secretary talked with a number of press correspon­ dents in Washington to whom he had N a t u r a l B u s i n e s s Y ea r sent on June 23rd a news memorandum Renewal of active effort to promote use relating to the new Division of Corpora­ of the natural business year has been tion Audits of the General Accounting stimulated by evidence in correspondence Office and its director, Captain T. Cole­ reaching American Institute headquarters man Andrews. indicating a reawakening of interest in Clipping records show several further natural fiscal closing dates. examples of news publicity resulting The assistant secretary interviewed from the original memorandum. These William W. Werntz, chief accountant of new results include a special article in the SEC, to request its cooperation. Mr. the July 21st issue of Business Week Werntz stated that, if he should receive and a special one-column news story in a sufficient number of inquiries from the New York Herald Tribune. Both of registered companies to indicate interest these articles were based on interviews in a shift to the natural business year, he with Captain Andrews arranged by the would bring this evidence to the attention Institute. of the Commission, and seek its author­ ity for the issuance of an accounting re­ F r a n k A. G a l e , lease restating SEC approval. Assistant Secretary. The Certified Public Accountant 9

surplus from income, or the total of in­ Research Department creases in reserves was equivalent to 16.6% of the total of incomes before the reserve charges. On an individual-com­ C o n t in g e n c y a n d W a r R eserves pany basis, and expressing the reserve Last month it was reported that a sur­ addition as a percentage of the amount vey of the annual reports of 410 com­ transferred from income to surplus, the panies with fiscal years ending subse­ charges ranged from 1.5% to 295.8%. quent to July 1, 1944, revealed that 164 The following table presents a distribu­ corporations provided for additional con­ tion of the reserve additions expressed tingency, war, or postwar reserves by as a percentage of the amount transferred charges reported in the income statement. to surplus from income, classified accord­ In total amount, these companies in­ ing to the amount of the corporate income creased their contingency, war, or post­ reported. Thus, in 16 of the 164 company war reserves approximately $271,000,000 reports, the reserve additions were less while transferring $1,363,000,000 from than 4.9% of the amounts transferred income to surplus. Percentagewise, this from income to surplus; in 2 of those total increase in reserves represented 16 reports the incomes transferred to 19.8% of the year’s total increase in surplus were less than $1,000,000.

AMOUNT OF INCOME TRANSFERRED TO SURPLUS (in millions) Under Over No. of *% $1 $1-$5 $5—$10 $10—$15 $15-$20 $20-$25 $25-$50 $50 Companies 0-5 2 6 4 3 1 16 5-10 1 12 3 3 6 1 2 25 10-15 5 11 7 4 1 2 1 31 15-20 2 10 1 1 3 1 18 20-25 2 10 1 1 14 25-30 2 5 3 1 2 13 30-35 5 2 7 35-40 2 4 3 1 10 40-45 1 3 1 1 1 7 45-50 1 3 1 5 50-55 1 2 1 4 55-60 3 1 4 60-65 2 2 65-70 70-75 75-80 1 1 2 80-85 2 2 85-90 1 1 90-95 95-100 Over 100 1 2 3

No. of Companies 26 77 23 14 10 3 7 4 164

* Amount of the reserve addition expressed as a percentage of the amount of income transferred to surplus. 10 The Certified Public Accountant

SEC R o u n d T a b l e Administrative Procedures of The Institute has accepted the invita­ Government Agencies tion of William W. Werntz, chief ac­ With the approval of the executive countant of the Securities and Exchange committee Samuel J. Broad, president of Commission, to appoint two representa­ the Institute, submitted the following let­ tives to meet with representatives of the ter to the Committee on the Judiciary of SEC and other professional organiza­ the House of Representatives of the tions to discuss problems of income deter­ United States, following a recommenda­ mination and reporting. George D. tion of the National Conference of Law­ Bailey, chairman of the committee on yers and Certified Public Accountants, accounting procedure, and the director of composed of representatives of the Amer­ research, have been designated as the rep­ ican Institute of Accountants and the resentatives of the Institute. American Bar Association:

C u r r e n t A s s e t s a n d L i a b il it ie s July 17, 1945. Copies of a proposed statement on cur­ C o m m it t e e o n t h e J u d ic ia r y , rent assets and current liabilities have H o u se of R epresentatives of t h e been released by the subcommittee to U n it e d S t a t e s , members of the committee on accounting W a s h in g t o n , D. C. procedure, the presidents of state socie­ Gentlemen: ties of certified public accountants, and The American Institute of Accountants a number of other organizations, for re­ is the national professional organization view and comment. It is proposed that the of certified public accountants. Our ex­ statement be used as a basis for an Ac­ ecutive committee has been much inter­ counting Research Bulletin. ested in the proposals to improve the administrative procedures of the several I n v e n t o r ie s a n d P o st w a r R eserves governmental agencies and in this con­ A subcommittee on inventories and one nection has given serious consideration to the bill introduced in the House of on postwar reserves have been appointed Representatives by Mr. Sumners (HR by the committee on accounting proce­ 1203) and in the Senate by Mr. McCarran dure. The subcommittee on inventories (S 7). We believe that the public wel­ will continue studies previously sus­ fare will be promoted by the enactment pended because of the press of war con­ of these bills into law though we believe ditions. Reports of studies on inventory that some clarification of certain of their pricing by members of prior subcommit­ terms is desirable. tees have been published in The Journal We observe that these bills provide, in of Accountancy in June and October, section 6(a), that “every interested per­ 1940, April, 1941, and January, 1943. son” may appear “by counsel or other qualified representatives before any agency.” We believe it would not be in S ubcommittee o n I n c o m e S t a t e m e n t the public interest if the term “other A report of the subcommittee on the qualified representatives” should be con­ income statement has been approved and strued in such a manner as to infringe is to be published in The Journal of upon the right of interested persons to be Accountancy for September. The sub­ represented by a certified public account­ committee is continuing its investigation ant before any agency whose jurisdiction involves accounting, because the certified of (a) concepts of income for the year, public accountant is particularly qualified and (b) criteria for determining the to deal with accounting matters. We men­ propriety of direct charges or credits to tion by way of example representation be­ surplus. fore the Internal Revenue Bureau of the C a r m a n G. B l o u g h , Treasury Department and the Securities Director of Research. and Exchange Commission. It is, of The Certified Public Accountant II course, of utmost interest and concern to to the public. The joint conference has the professional body of accountants in recorded its opinion that the bills would this country, consisting of over 25,000 be in the direction of promoting the pub­ certified public accountants who have lic welfare. Our executive committee qualified under the laws of the various shares this view and the purpose of this states to practice public accountancy, that letter is to support the bills and at the they be permitted to continue to serve same time to suggest clarification of the their clients before government agencies wording so as to carry out fully the intent in matters involving accountancy; and of the proposed legislation. the proper solution of such matters fre­ Respectfully yours, quently requires the attention of certified S a m u e l J. B ro ad, public accountants. We suggest the draft President. bills be clarified as to the nature of the qualifications to be required of “qualified The following reply was received from representatives.” To accomplish this a the chairman of the House committee: sentence might be added to section 6 to July 19, 1945 state, in effect, that “a representative shall be deemed to be a qualified representative Mr. S a m u e l J. B r o a d , President, if he possesses qualifications to deal with American Institute of Accountants. the matters which are under considera­ tion by the agency.” My dear Mr. Broad: I appreciate hav­ In the same connection we notice that ing your letter dated July 17, 1945, giving the sentence following that referred to in me the benefit of the views of the Ameri­ the preceding paragraph reads as follows: can Institute of Accountants with respect “Every person appearing or summoned to the Federal Administrative Procedure in any agency proceeding shall be freely Bills S 7 and HR 1203. accorded the right to be accompanied and As you may know, the Committee on advised by counsel.” the Judiciary recently began public hear­ The word “proceeding” seems indefinite ings on the general subject of federal to us. If it is to be taken to include in­ administrative procedure. These hearings formal discussions and hearings we would were not concluded, however, and will be strongly recommend that there be added continued following the reconvening of at the end of the sentence the further the House this fall. words “and other qualified representa­ The suggestions contained in your let­ tive,” corresponding to the wording of ter will be brought to the attention of the the preceding sentence. There could seem members of the Committee when the bills to be little objection to the use of these are being considered. additional words in any event, because if Sincerely yours, the proceeding was of a nature which H a t t o n W. S u m n e r s . required legal services, then certified pub­ lic accountants would not be “qualified” ; Veterans’ Committees while if the matter to be considered had to do with accounting principles, prac­ I n d i a n a tices, and procedures we do not believe Indiana Association of Certified Public that the right of the person to be accom­ Accountants, through its special commit­ panied and advised by a certified public tee to cooperate with veterans, recently accountant should be abridged. sent the following letter and questionnaire It is our understanding that the Ameri­ to public accounting firms in that state: can Bar Association has recorded its ap­ proval of the bills referred to herein. “The special committee to cooperate with They have also received the attention of veterans was appointed by the president the National Conference of Lawyers and of our Association at the suggestion of Certified Public Accountants, the joint the American Institute of Accountants to body created by the American Bar Assoc­ assist members of the accounting profes­ iation and the American Institute of sion who have been serving in the armed Accountants to consider problems of forces to resume accounting practice if mutual interest to the two professions and they desire to do so upon discharge, and 12 The Certified Public Accountant

possibly to assist other veterans who may N e w Y ork be qualified for public accounting work At a recent meeting of the committee to find positions. It is our intention to offer our cooperation to official agencies on cooperation with veterans of the New established under government auspices, York State Society of Certified Public and to the various schools of business, to Accountants, objectives and working render placement service to veterans. methods were clarified. It was agreed “The first requirement is to ascertain the that this committee has a dual responsi­ probable number of staff positions in pub­ bility: 1. To assist members of the so­ lic accounting firms in the state that will ciety, and others released from the armed be available to returning veterans. It will forces, who wish to resume public ac­ be greatly appreciated if you will answer counting practice or to enter the profes­ the accompanying questionnaire, accord­ sion; and 2. To cooperate with other pub­ ing to best estimates at the present time, with the understanding that you will lic and private organizations which are incur no obligation of any kind in so undertaking to assist returning service­ doing. men. “By giving full cooperation to the Amer­ The following outline of working meth­ ican Institute of Accountants in this im­ ods was developed: portant matter, we are given another 1. Information and advice will be avail­ opportunity to render a service that will able for veterans, at the society’s office, add further prestige to our Association, with respect to such matters as (a) fa­ and I earnestly hope that you will give this your careful and prompt considera­ cilities for reviewing accounting develop­ tion. ments while they have been serving with Yours very truly, the armed forces; (b) arrangements for J. B . B a e r n c o p f , Chairman.” completing accounting courses interrupted by the war; (c) educational opportunities Questionnaire for persons wishing to begin the study of accountancy; (d) requirements for the 1. Approximately how many positions CPA certificate; (e) methods of securing are now open on your accounting staff, at the following levels? (Do not include practical training and experience neces­ positions which you expect will be filled sary for professional work. by former employees now in service.) 2. The society’s placement service, al­ Senior ...... ready operating under the direction of an Semi-senior ...... assistant secretary, will adapt its facili­ Junior (experienced) ...... ties to the requirements of returning Junior (inexperienced) ...... servicemen. Arrangements have been 2. How many of your former employees made to answer questions which relate now in the service are expected to return directly or indirectly to the establishment to your staff? of public accounting practice, including Senior ...... those concerned with the rights and obli­ Semi-senior...... gations of veterans under the Selective Junior ...... Service Law, the “G. I. Bill of Rights,” (If you have not communicated with and the Internal Revenue Code. In gen­ former employees in the service, will you eral, veterans seeking information about undertake to do so and advise us? Your government policies and their interpreta­ attention is drawn to the provisions of tion will be referred to an office of the section 8(b) of the Selective Training appropriate government agency, as it is and Service Act of September, 1940, and considered impracticable for society rep­ relating regulations, concerning the resentatives to be currently informed rights of servicemen to reemployment.) concerning detailed regulations which are Name of Firm ...... subject to frequent revision. Special con­ B y ...... sideration will be given to the require­ D ate...... ments of disabled veterans. The Certified Public Accountant 13

War Loss Recoveries CPA of the Philippine Islands and be­ The tax committee of the National came a member of the American Insti­ Foreign Trade Council recently issued a tute of Accountants in 1923. report on war-loss recoveries indicating Jeremiah Lockwood of Philadelphia, tax problems and inequities which may Pa., died June 7, 1945. He was chair­ arise under provisions of section 127 of man of the Accounting Department of the Internal Revenue Code. This report the Wharton School of the University proposes amendments to the Code dealing of Pennsylvania. Mr. Lockwood was a with valuation of recoveries, tax rate on CPA of Pennsylvania and became a income from recoveries, treatment of member of the American Institute of recoveries as an aggregate amount, cases Accountants in 1936. where losses are not claimed or allowed, and time of recovery. Berthold Luedemann of Dayton, Ohio, died June 26th. Mr. Luedemann Carry-Overs and Carry-Backs was a partner in the firm of Haskins & The American Bar Association has Sells. He was a CPA of Indiana, New adopted a resolution recommending to York, and Ohio and became a member Congress amendment of the Internal of the American Institute of Account­ Revenue Code to extend to transferors ants in 1935. and transferees in nontaxable reorgani­ zations the full benefit of the net operat­ George R. Poole of Raleigh, North ing loss and unused excess-profits carry­ Carolina, died July 26th. He was senior overs and carry-backs. partner in the firm of Poole and Lowri­ more. Mr. Poole was a past president and one of the founders of the North Carolina Association of Certified Pub­ Donald G. Colquhoun of Los lic Accountants. He served on various Angeles, Cal., died July 11th. Mr. Col­ committees of the American Institute of quhoun was a partner in the firm of Accountants, and on the Institute’s coun­ Lybrand, Ross Bros. & Montgomery. He cil from 1941 to 1944. Mr. Poole was a was a CPA of California, Illinois, and CPA of North Carolina and Virginia New York, and became a member of the and had been a member of the Institute American Institute of Accountants in since 1925. 1939. Eugene Childress Reynolds of Mem­ Frank E. Field of New York, N. Y., phis, Tenn., a member of the firm of died July 16th. Mr. Field, a partner in Reynolds, Bone & Griesbeck, died July the firm of Klein, Hinds & Finke, was 26th. He was a CPA of Pennsylvania a CPA of New York. He became a mem­ and had been a member of the American ber of the Institute this year. Institute of Accountants since 1926. Ellsworth Fulk of Lincoln, Neb., died Clayton Trout of Dayton, Ohio, June 8, 1945. He was a CPA of died June 6. 1945. Mr. Trout was a part­ Nebraska and Iowa, and became a mem­ ner in the firm of Trout & Barstow. ber of the American Institute of Ac­ He was a CPA of Ohio and had been a countants in 1926. Mr. Fulk served on member of the American Institute of the Institute’s committees on membership Accountants since 1942. and state legislation. Herbert E. White of Baltimore, Md., Janies Russell Herridge of Manila, died June 11, 1945. Mr. White was a P.I., died in June after being released CPA of Maryland and had been a mem­ from an internment camp at Santo ber of the American Institute of Tomas, Manila. Mr. Herridge was a Accountants since 1936. 14 The Certified Public Accountant

Election of Members M aryland *Charles H. Amrhine, Baltimore C a l ifo r n ia *Thomas M. Hoffmeister, Baltimore

Harold N. Finkel, Los Angeles M assachusetts Raymond E. Finkel, Los Angeles *Ralph V. Hunt, Santa Monica *Wallace E. Brimer, Andover *Paul Ziskin, Los Angeles *Lester A. Cahoon, Cambridge Roy B. Chapin, Boston Colorado M ic h ig a n William A. Loach, Denver *Leonard E. Johnson, Dearborn Connecticut Edward H. Lunt, Saginaw John J. Joyce, Hartford *John L. Stewart, Jr., Detroit Anthony Skorupski, Middletown M inn e so t a D elaware *Bernard F. Doyle, St. Paul †Joseph I. Haggerty, Wilmington *Everett T. Leifson, Minneapolis is s is s ip p i D is t r ic t o f C o l u m b ia M *Vincent J. Dorgan, Sr., Washington *George R. Hughes, Meridian M isso uri F lorida Lee C. Shepard, Jr., St. Petersburg Warren S. Wagner, St. Louis N ew Jersey I dah o *Leroy C. Shaw, Boise David F. Alpren, Paterson Jacob Barnett, Passaic I llinois Morris H. Gard, Plainfield †Ernest G. Maihack, Newark Kenyon D. Bowes, Chicago †John S. Darling, Chicago N ew Y ork Mitchell I. Ellin, Chicago George Allerhand, New York *Thomas M. Flynn, Chicago *Seward Butler, New York Russell F. Gehm, Chicago *Sidney M. Dunk, Jamestown Karl K. Kaempfer, Chicago Herbert Greenwald, New York *Samuel F. Kamin, Chicago Ernest R. Harding, New York Irving G. Miller, Chicago *Eliot Jones, Jr., New York Russell V. Puzey, Chicago Max Karnell, New York *Earl E. Richardson, Decatur *Samuel P. Kasdan, New York Robert G. Rockwell, Decatur *Erwin F. Krist, New York Julius Seltzer, Chicago *Sidney T. Lippel, New York Louis E. Skolnik, Chicago William Moeller, New York Wilbur A. Smoot, Chicago *Arthur H. Seibert, Bethpage *Francis J. Weitekamp, Chicago †E. Paul Venneman, Buffalo Maurice White, Chicago *Isadore A. Zuckerbrot, New York I n d ia n a N orth Carolina *Charles M. Edwards, South Bend Augustus T. Allen, Raleigh *Wilbert E. Theobald, Fort Wayne Elmo Beasley, Winston-Salem Worth B. Bowman, High Point K e n tu c k y George D. Deen, Greensboro *Warren F. Allen, Hopkinsville *John C. McNeil, Wheelwright O h io *John Buchko, Cleveland L o u isia n a George H. Drickamer, Cleveland Maurice Glazer, Monroe *Carl J. Fink, Cleveland *Monroe B. Stephenson, New Orleans *Richard H. Keys, Cincinnati *H. M. Kimpel, Cleveland Heights * Admitted as associates. *John J. Kirk, Cleveland † Advanced to membership. S. Orville Walthall, Cleveland The Certified Public Accountant 15

O kla h o m a *Alfred D. Howell, Oklahoma City New Books

O regon *Lawrence N. Jolma, Portland *Walker E. Roberts, Portland The following publications, recently acquired by the library of the American P ennsylvania Institute of Accountants, are available N. DelRoy Acker, Philadelphia for Institute members and associates. Maurice M. August, Philadelphia *Morris Barasch, Philadelphia Bureau of National Affairs, Inc. Wartime Louis J. Braitman, Philadelphia Wage Control and Dispute Settlement. Edmund H. Senft, York 1945. Bureau of National Affairs, Harry O. Zimmerman, Philadelphia Washington, D. C. T e n n e ss e e Carter, Roger N., and Edwards, Herbert. Murray & Carter’s Guide to Income- *Claude W. Mason, Memphis *John E. Peterson, Jr., Jamestown Tax Practice, ed. 15. 1944. Gee & Co., Russell G. Ragsdale, Memphis Ltd., London, England. Chudson, Walter A. Pattern of Corpor­ T e x a s ate Financial Structure. 1945. Na­ *Stewart V. Boney, Houston tional Bureau of Economic Research, *Stanley S. Gillis, Houston New York, N. Y. †Charles A. Meroney, Dallas Elwell, Fayette H. Elementary Account­ U t a h ing for Colleges. 1945. Ginn and Co., *Jean H. Alleman, Salt Lake City Boston, Mass. Lawrence H. Birrell, Salt Lake City Ferguson, William B. Shipbuilding Cost L. B. Summerhays, Salt Lake City and Production Methods. 1944. Cor­ nell Maritime Press, New York, N. Y. W a sh in g t o n Gilman, Stephen. What the Figures *Edward DeFelice, Hanford Mean. 1944. Ronald Press Co., New *Stuart D. Hood, Seattle *Alvin K. Kertes, Everett York, N. Y. †John F. Tuohy, Seattle Groves, Harold M. Production, Jobs and *Robert J. Williams, Walla Walla Taxes. 1944. McGraw-Hill Book Co., Inc., New York, N. Y. (Committee W isc o n sin for Economic Development Research *Carl A. Anderson, Milwaukee Study.) *William E. Campbell, Green Bay Harris, Seymour E. Price and Related Arthur D. Peterson, Milwaukee *Harry W. Swanson, Madison Controls in the United States. 1945. McGraw-Hill Book Co., Inc., New York, N. Y. Sons of Institute Members Jackson, J. Hugh. Accounting Princi­ with the Armed Forces ples. 1945. Charles R. Hadley Co., Los Major Milton W. Amster, flight surgeon, Angeles, Calif. Army Air Forces; and Captain Joseph Lasser, J. K. How to Speed up Settle­ J. Amster, orthopedic surgeon, U. S. ment of Your Terminated War Con­ Army (sons of Henry Amster, New tract. 1945. McGraw-Hill Book Co., York, N. Y.) Inc., New York, N. Y. Edward J. McDevitt, III (son of Edward Stikeman, H. Heward, Editor. Income J. McDevitt, Boston, Mass.)—Ensign, Tax and Excess-profits Tax (Canada), USNR. 1944. Richard De Boo, Ltd., Toronto, Ellis I. Smith (son of Walter I. Smith, Canada. Stamford, Conn)—Major, Signal Ser­ H e l e n M. J o h n s t o n e , vice Group, U. S. Army. Librarian. 16 The Certified Public Accountant

Paid Staffs for of this literature would be avail­ State Accounting Societies able from the American Institute of Accountants. A number of state societies have em­ “(d) To keep currently informed, by ployed staff assistants to carry out ad­ every possible method, of activities ministrative, editorial, and sometimes, within the state (favorable or un­ public-relations work, and to assist favorable) which might affect committees. New York, Illinois, Massa­ the interests of accountants and chusetts, Michigan, and New Jersey are to inform the state society officers among this group, and others are con­ without delay so that early action sidering the subject. The California might be taken instead of last- society has reprinted in its bulletin a minute efforts. As part of this report of a committee recommending the phase of his activities it would be employment of a full-time secretary. necessary for him to make con­ Following is an interesting excerpt from tact with state officers and legis­ lators at times and under condi­ the report outlining proposed duties of tions when we are not asking such an employee: them for something or are not “(1) The full-time employment of a on the carpet. man (probably not an accountant) who “(e) When legislative or other trouble could act as secretary of the state society threatens he would immediately but who, by training and disposition, is be available to make the proper able to meet and impress the public and approaches and to organize the who can speak before groups, associa­ efforts of our own members in tions, and legislative bodies to inform protection of their rights and live­ them as to accounting matters, the func­ lihood. tion of accountants, and the truth relating to matters and cases which might other­ wise have an adverse effect upon our Cost Accountants Name interests. Such a man might occupy him­ Assistant Secretary self as follows: Appointment of Arthur B. Gunnarson “(a) In the routine of state society ad­ as assistant secretary of the National ministration and contact with the members and chapters. Association of Cost Accountants was an­ nounced by Secretary Wyman P. Fiske “(b) In establishing relations with early in August. This appointment is secretaries of banking, legal, and another step in the expansion of the facili­ trade associations for cooperative ties and services offered by NACA to actions and, incidentally, to speak assist industrial firms in adapting their at the meetings of these groups cost-ascertainment procedures to recon­ or to provide speakers who are version and postwar requirements. Mr. first advised as to the ground to be covered and the method of Gunnarson, a member of NACA’s board approach. He would thereby of directors from 1934 to 1940, has held build up understanding and a con­ important committee assignments and has dition under which we might well represented the Association on various expect their help when trouble committees dealing with relations be­ threatened us. tween industry and the government. As­ sociated with the Chamber of Commerce “(c) As part of these contacts it would be proper and advisable for him of the United States for the past fifteen (under the guidance of profes­ years, he has served that organization as sional accountants) to dissem­ secretary of its committee on business inate literature explaining or pre­ statistics, manager of the Domestic Dis­ senting accounting matters of tribution Department, and in other ad­ current or general interest Much ministrative capacities. THE Ce r t if ie d Pu b l ic A c c o u n t a n t A Bulletin of The American Institute of Accountants

Vol. 25 September, 1945 No. 9

tions which would otherwise be used by Secretary's Notes Institute members if an annual meeting were held.

F a l l C o u n c il M e e t in g However, plans have been laid for a larger meeting of the council of the Insti- In a letter dated August 22nd, Samuel J. Broad, president of the Institute, noti­ fied all members and associates of the Tax Recommendations cancellation of the annual meeting and submitted a mail ballot for the use of Invited members in voting for officers, members Postwar tax legislation is likely of council, and a committee on nomina­ to be enacted by Congress this fall. tions. Members are asked to return their The Institute’s committee on federal ballots immediately. taxation is considering possible The question whether an effort should recommendations on matters of both be made to hold the annual meeting or policy and administration, which not was seriously considered by the ex­ may be submitted to Congress at ecutive committee after the surrender of an appropriate opportunity. Japan. However, a second inquiry di­ The Institute’s committee will rected to the Office of Defense Trans­ welcome the suggestions of state portation at that time, indicated that there society committees on federal tax­ appeared to be no likelihood of revocation ation, as well as those of individual of the ban on conventions until the first members and associates of the In­ of next year at best. stitute. Attention is directed to the It was decided that even though the Institute committee’s “Postwar convention ban were withdrawn earlier, as Taxation Recommendations,” pub­ it now has been, travel and hotel accommo­ lished in The Journal of Ac­ dations would remain highly congested. countancy, in November, 1944, and In addition, it seemed doubtful whether “Recommendations for Revisions a technical program up to the high stand­ of the Internal Revenue Code,” ards of other years could be arranged in published in the December, 1944, the time remaining. issue of The Journal of Account­ Regardless of government rules, mem­ ancy. The committee will welcome bers of the executive committee felt that suggestions for modification of it would be a gracious act to leave avail­ these recommendations. able to military personnel accommoda­

COPYRIGHT 1945 BY AMERICAN INSTITUTE OF ACCOUNTANTS 13 East 41st Street, New York 17, N. Y. 2 The Certified Public Accountant tute than had been formerly expected, to would be considered desirable to admit be held at the Palmer House, Chicago, noncertified public accountants as asso­ October 22nd and 23rd. Both retiring ciates of the state society. and newly elected members of council a re In Colorado, following enactment of being invited to attend. Presidents of a regulatory accounting act, public ac­ state societies are also being invited and, countants registered under that act were contrary to the report in the August admitted as associates of the Colorado Certified P ublic Accountant, the Ad­ Society of Certified Public Accountants visory Council of State Society Presi­ by virtue of an amendment to its by­ dents will hold a separate meeting. laws. No independent organization of Officers of the American Accounting public accountants has existed in Colo­ Association, the Association of CPA rado since that time. Examiners, and the Illinois Society of Several other state societies admit non­ Certified Public Accountants are being certified accountants on a limited basis. asked to meet with the Institute council. The New York State Society admits as All Institute committee chairmen are associates individuals who have passed being requested to attend and to present the CPA examinations of the state, but reports which not only will record the have not completed the experience re­ accomplishments of the past year, but will quirement necessary to receive the cer­ outline problems confronting the profes­ tificate. The Tennessee Society admits sion in the respective fields of the noncertified employees of members of the committees’ activities. society as associates. It is, therefore, expected that nearly The Connecticut Society maintains 200 of the present leaders of the profes­ friendly, cooperative relations with an sional accounting organizations will be in association of public accountants organ­ attendance, and the meeting will afford ized in that state several years ago. an opportunity for constructive discus­ Members of the latter group have been sion of every aspect of professional invited to meetings of the Connecticut affairs. A report of the proceedings will Society and representatives of the two be sent to all members and associates as organizations have conferred on matters soon as practicable after the meeting. of mutual interest. The Illinois Society of Certified Pub­ lic Accountants has invited all those in A id to V e t e r a n s attendance at the meeting to be its guests at a luncheon on October 22nd. Increasing numbers of accountants now serving in the armed forces are com­ ing to the Institute for information and R e l a t io n s w i t h P u b l ic A c c o u n t a n t s advice related to the problem of reestab­ In the July Certified Public Ac­ lishing themselves in civilian life. In the c o u n t a n t reference was made to states past month at least 50 accountants in in which organizations of noncertified uniform have appeared personally at the public accountants exist. Since that time Institute offices and conferred with information has been received of the ex­ Elizabeth Arliss, acting assistant secre­ istence of such organizations in other tary ; and Thomas W. Leland, educational states, including Washington, Missouri, director; or the secretary. In addition, Nebraska, and Wyoming. a large number of inquiries on aid to One state society has requested the veterans have been answered by mail or opinion of the Institute as to the best over the telephone. means of establishing cooperative rela­ Many of the war veterans do not wish tionships with a local organization of to return to the cities where they were noncertified public accountants. The formerly employed. Some of those who specific question was raised whether it were in smaller cities wish to find jobs The Certified Public Accountant 3 in Chicago or New York, while some has resigned this position for the pur­ of those who formerly worked in the pose of entering the practice of law or large metropolitan centers are anxious business. Mrs. Golub is a member of to find positions in the smaller towns. the New York Bar. Institute members Some of the men who were in public have read her reviews of tax cases in accounting have decided to seek places The Journal of Accountancy and her in the accounting departments of pri­ reports in The Certified Public Ac­ vate corporations, but a large number c o u n t a n t on the activities of the tax will return to accounting practice. Some committee. J. L. C. have expressed dissatisfaction at the thought of returning to their former po­ Professional Ethics sitions at the same salary level they occupied before entering the service, or Under instructions of the council, the in positions subordinate to former col­ committee on professional ethics has leagues of equal or lower status on the drafted a proposed amendment to the staff who did not serve in the armed rules of professional conduct on the forces. In all cases, Institute officials subject of listings in directories. The are advising such men to discuss the instructions of the council were the re­ matter thoroughly with former employ­ sult of a request by the president of the ers to ascertain the actual facts before Illinois Society of Certified Public Ac­ making a decision. countants that the rules be made more Specific requests for assistance in find­ stringent, so as to eliminate paid listings ing positions are being referred to state in any directories other than telephone society committees on cooperation with directories and to eliminate the use of veterans in the areas where the indi­ bold type or other display devices in vidual concerned indicates a desire to telephone directories. The proposed rule live. A description of veterans’ privileges will be submitted for the consideration under the G.I. Bill of Rights, prepared of council at its meeting, October 22-23, by Thomas W. Leland, educational direc­ 1945. Comments of members prior to tor, who recently discussed the matter that date are invited. The rule would with the Veterans Administration at not be finally adopted without submis­ Washington, appears elsewhere in this sion to the membership for a vote by bulletin. mail ballot. The draft is as follows:

“A member or an associate may author­ O f f ic e r s a n d S t a f f ize the listing in directories of his name, Samuel J. Broad, president of the name of firm, address, telephone number, American Institute of Accountants was designation C.P.A., and membership in a speaker at the annual meeting of the national and state organizations of cer­ tified public accountants, or any of this council of the Dominion Association of information, provided that (a) no listing Chartered Accountants at Winnipeg, shall be purchased directly or indirectly, August 21st and 22nd. The annual meet­ except that a reasonable fee may be paid ing of the Association was canceled due to list name or name of firm, address to wartime conditions. Mr. Broad re­ and telephone number under appropriate cently discussed postwar problems affect­ occupational captions in classified tele­ ing the accounting profession in its phone directories and (b) no listing shall relation with clients and the government be displayed in special type or form, in­ with officers of the Colorado Society of serted under the caption for a locality not embracing his address, shown grouped Certified Public Accountants in Denver. with the names of partners or employees Rebecca Newman Golub, technical as­ connected with the same firm, or other­ sistant to the Institute committee on wise designed to produce an effect of federal taxation for the past two years, advertising.” 4 The Certified Public Accountant

ant Excerpts from the 1944 annual Research Department report of an oil company illustrate one phase of these problems. C o m m it t e e o n A c c o u n t in g P ro cedure The president’s report to the stockhold­ ers of the corporation stated in part: The agenda of the meeting of the committee on accounting procedure held “The substantial growth in net income September 13th and 14th provided for for 1944 is to be accounted for largely subcommittee reports and discussions re­ by an increased volume of sales and the lated to the problems involved in account­ much more favorable position of the ing for special war reserves, inventories, company as to federal income taxes which resulted from the rapid expansion of its recoveries of war losses, continued use crude-oil production activities during the of properties fully amortized, stock op­ year. The increased drilling of produc­ tions, current assets and liabilities, income tive wells, the intangible costs of which and surplus, etc. are deductible for federal income-tax purposes, resulted in a much smaller part S ubcommittee S t a t e m e n t s of the company’s total income being sub­ ject to federal income taxes for 1944. . . . A report of the subcommittee on the “The company follows the practice of income statement appeared in the Sep­ making all charges for depreciation, de­ tember issue of The Journal of Account­ pletion and amortization of leasehold, ancy. Arrangements have been made for drilling and lease-equipment costs on a the distribution of reprints of that report unit-production basis, based on the esti­ to members of the Controllers Institute mated reserves underlying the individual of America, the American Accounting leases. Association, and to other professional “In addition to such normal charges for the year, a special provision of organizations. Copies of a proposed $1,500,000 for additional amortization of statement drafted by the subcommittee intangible drilling costs of productive on current assets and liabilities have been wells was charged to 1944 income in con­ distributed to presidents of state soci­ sideration of the unusual tax reduction eties, the Controllers Institute, NACA, resulting from production activities and and others, for comment and suggestion. to reduce future charges for amortization and depletion, particularly where high R ecord S y s t e m s fo r S m a l l B u s in e s s e s drilling costs had been incurred under wartime conditions. . . . A report of a departmental survey of “Also the provisions of the Revenue record systems available to small busi­ Act with respect to percentage depletion nesses, prepared at the request of the and intangible-drilling cost deductions Robert Morris Associates, was published from taxable income provide assistance in the Bulletin of that organization in to production activities, which are of August The report was designed to particular importance in a period of high serve as a check list of sources of infor­ taxes such as the present. The high rate of exploration and wildcat drilling during mation about accounting records and the war has proven the soundness of record forms designed for and sold to these provisions of the Revenue Act from small businesses. Its primary purpose the standpoint of encouraging crude-oil was to aid veterans undertaking their exploration and drilling activities in a own businesses. time when, in spite of high costs and other difficulties, it is so necessary that the A c c o u n t in g fo r I n c o m e T a x e s crude-oil reserves and current producing ability of the nation be maintained at a The presentation of the effect of the very high level.” differences between the accounting and the income-tax concepts of income con­ The consolidated statement of income tinues to pose problems for the account­ displayed the $1,500,000 special charge The Certified Public Accountant 5 for additional amortization of intangible would be our preference to set aside a drilling costs in a section entitled “esti­ reserve out of income for the full amount mated taxes on income and special of this $3,200,000 and to treat the same charge” and referenced to this note: as a special write-off of intangible drilling costs capitalized during the current year; “During the year 1944 the companies however, the management has elected to further expanded their operations in the limit the special write-off for additional acquisition and development of crude-oil amortization to the amount of $1,500,000, properties and continued to capitalize in­ since its practice is in line with general tangible drilling costs relating to produc­ practice of the industry in prior years ing properties to be amortized on a unit and the applicability of any changes that basis computed on estimated reserves. may be required to conform with gen­ The net amount capitalized in 1944 was eral practice in 1944 is not yet crystal­ approximately $6,250,000. Such costs are lized." charged off, however, for federal income- C a r m a n G. B lo u g h , tax purposes. The reduction in federal Director of Research. taxes on income resulting from this treat­ ment of intangible drilling costs amounted to approximately $4,800,000, including credit for carry-back to prior years. It is Educational Department the practice of The ----- Company and its subsidiary to charge to current ex­ pense (on the books as well as for tax R e f r e s h e r C o u rs e purposes) all expenditures relating to nonproductive wells, lease rentals and Considerable progress has been made abandonments, and all other exploration in the past month toward the publication costs incident to the acquisition and de­ of Contemporary Accounting, the Insti­ velopment of crude-oil properties. It is tute’s refresher course for public account­ estimated that all of these items had the ants. It is expected that the course will net effect of increasing income for the be available for shipment late in Sep­ year by the amount of approximately tember. Orders for 6,900 copies have $3,200,000, against which a special write­ been received. off of $1,500,000 has been made and applied against intangible drilling costs. Recent removal of restrictions on the This is in addition to the regular amorti­ use of paper has made it possible to in­ zation charges provided for during the crease the initial printing to 9,600 copies. year.” This increase will make it possible to fill all orders now on hand and to take care The auditors’ report gave an opinion of additional orders expected following subject to these comments: the publication date. The committee on education of the “Reference is made to Note D to the financial statements from which it will be Massachusetts Society of Certified Pub­ noted that The ----- Company and its lic Accountants has announced a pro­ subsidiary have continued to capitalize gram of eight meetings based upon the intangible drilling costs relating to pro­ refresher course. This committee will ducing properties to be amortized on a select what appear to them to be the unit basis computed on estimated reserves. most timely chapters in the course and The net amount capitalized in 1944 was will provide speakers to conduct the $6,250,000 which had the effect of re­ meetings. The sessions will be held on ducing the amount of federal taxes on Fridays from 6 to 8 P.M., starting Sep­ income by approximately $4,800,000. It tember 28th. Following the lectures, is estimated that after the application of other items referred to in Note D the ample provision will be afforded for net effect of all such items was to in­ questions and discussion. Members of crease net income for the year by the the Massachusetts Society and their staffs amount of approximately $3,200,000. It are invited to attend. 6 The Certified Public Accountant

Further inquiries concerning the con­ the use of returning veterans. The New tent of the refresher course and its pos­ York State Society has made arrange­ sible use in courses conducted by educa­ ments for the publication of a pamphlet tional institutions have been received. dealing with the New York State income Schools or organizations of accountants tax and the state franchise tax. The Min­ planning to use the material in Fall nesota Certified Public Accountant for courses should inform the Institute as to July, 1945, carried a supplement discuss­ the time it is desired to begin classes. ing Minnesota income and franchise The Institute will cooperate to the full taxes. An explanation of new tax laws of extent possible in making copies of the New Jersey was prepared by accountants publication or the first chapters of the for distribution by members of the New book available for such use. Jersey Bankers Association. This pam­ phlet discusses the intangibles tax, and C h a r t e r e d A c c o u n t a n t s the new corporation business or franchise A n n o u n c e R e f r e s h e r C o u rse tax. The Accountant announces that the Council of the Institute of Chartered N a t io n a l R o ster U n d e r t a k e s Accountants in England and Wales con­ P l a c e m e n t W o rk ducted a refresher course during the W. T. Read, representing the War three weeks from August 17th to Sep­ Manpower Commission, recently called tember 7th at Emanuel College, Cam­ at the Institute office to emphasize the bridge. The course comprised the fol­ work of the National Roster of Scientific lowing subjects: and Specialized Personnel in the place­ 1. The work of the taxation and finan­ ment of discharged servicemen and cial relations committee. women in accounting positions. 2. Recommendations issued by the coun­ Under the procedures now applicable cil on accounting principles. to veterans of World War II, an em­ 3. Company-law amendment, including ployer public accountant may write di­ the evidence given by the Institute. 4. Excess-profits tax and war taxation. rectly to the National Roster or may 5. Government controls, including lim­ apply at the local offices of the United itation of supplies, purchase tax, States Employment Service when he has war damage, break clauses. positions available for returning service­ 6. Pay-as-you-earn income tax. men. If he approaches the Roster di­ 7. Trade associations and their devel­ rectly, giving specifications for the opment. personnel he is endeavoring to find, the 8. Professional etiquette. Roster will send to the local office of 9. Changes in auditing technique. the United States Employment Service 10. Cost accounting, including govern­ brief statements about individuals who ment costing, limitation of profits, etc. appear to meet the employer’s needs. 11. Mechanized accounting. The local office of the United States 12. The estate - duty provisions of the Employment Service, in turn, will refer Finance Act, 1940. these records to the prospective employer. If the employer goes directly to the P a m p h l e t s o n S t a t e T a x L a w s local office of the United States Employ­ Presidents of state societies of certified ment Service and that office has regis­ public accountants were requested to con­ trants who meet his needs, referrals are sider whether new developments in state made directly. If suitable personnel is income taxes and other state taxes of not available through the local office, it interest to accountants had been sufficient notifies the National Roster. to make desirable the publication of a The National Roster, which is a divi­ pamphlet on the subject of state taxes for sion of the Placement Bureau of the The Certified Public Accountant 7

War Manpower Commission, does not an approved institution. While enrolled recommend personnel for positions. It in an approved full-time course, the vet­ merely furnishes a prospective employer eran, upon application to the Veterans with information about qualified candi­ Administration, is paid a subsistence al­ dates. Its address is 1006 U St, N.W., lowance specified by law. "Public accountants who return to pub­ Washington, D. C. lic practice after service with the armed forces will be primarily interested in the E d u c a t io n a n d T r a in in g provisions of the GI Bill for a refresher o f W a r V e t e r a n s course embracing the content of Contem­ porary Accounting. The following information relating to “Students taking less than full-time opportunities for the education and train­ courses will be entitled to a lesser benefit, ing of war veterans has been excerpted determined according to the regulations from Contemporary Accounting, the In­ of the Veterans Administration. In gen­ stitute’s refresher course for public ac­ eral, these regulations provide that part- countants which is now in preparation, time courses shall be measured only in in the belief that it will be of interest to fractions of three-fourths, one-half, and many Institute members at this time: one-fourth of a standard full-time course for the type of training pursued, and “Two legislative acts provide programs benefits will be paid accordingly. No for the education and training of veterans subsistence allowance will be paid for of World War II. Public Law No. 16, less than three semester hours of under­ 78th Congress, provides vocational train­ graduate study each semester, or the ing for the disabled. Public Law No. 346, equivalent. 78th Congress, commonly referred to as “Under the GI Bill, the Veterans Ad­ the GI Bill, entitles eligible veterans to ministration will pay to an educational education or training for a period of one institution the costs of tuition, fees, books, to four years at any approved educational equipment, and supplies not to exceed a or training institution. maximum of five hundred dollars for a “Complete information concerning these school year. Payments to the institution benefits may be obtained from the Vet­ for a veteran, except under specified con­ erans Administration regional offices. ditions, cannot exceed the rate regularly Any veteran who served in the active charged other students for the same or military or naval forces on or after comparable services. Veterans Adminis­ September 16, 1940, and prior to the tration regulations prescribe the methods termination of the war, for a period of for determining the tuition payments for ninety days or more (exclusive of the part-time courses and for courses extend­ time spent in college training programs ing over a period of less than a college under certain conditions), upon a dis­ year. charge other than dishonorable, is eligible “Benefits for veterans pursuing train­ for a course of education or training or ing on the job are authorized by the pro­ for a refresher or retraining course. A visions of Public Law No. 16 and Public person whose education or training was Law No. 346. Compensation from em­ interrupted by entrance into the service ployer to a veteran is authorized under (all veterans not over twenty-five years either Act However, when such com­ of age at the time of induction are pre­ pensation is added to the increased pen­ sumed by law to have had their educa­ sion under Public Law No. 16 or the tion interrupted) is entitled to one year subsistence allowance under Public Law of education or training plus an addi­ No. 346, the combined amounts cannot tional period of study based on length of exceed the amount an employer is pay­ service. Any other veteran is limited to ing a qualified beginning employee in a refresher or retraining course of one the occupation in which the veteran is year of full-time study or such lesser time being trained. For example, if the per­ as the course may take. This training son who is otherwise eligible under Pub­ may be at either the graduate or under­ lic Law No. 346 to receive a subsistence graduate level, hut it must be taken at allowance of $50 a month is paid $125 8 The Certified Public Accountant a month by the employer-trainer, based establishments), within such jurisdiction, upon the standard work-week, exclusive which are qualified and equipped to fur­ of overtime, and the minimum entrance nish education or training (including wage paid to a trained employee in the apprenticeship and refresher or retrain­ particular job for which the person is ing training) . . ." Accordingly, in order being trained is $150 a month, similarly for a public accountant or a public ac­ based on the standard work-week, ex­ counting firm to furnish training on the clusive of overtime, such person’s sub­ job to veterans under Public Law No. sistence allowance would be reduced $25 346, it will be necessary for each estab­ per month since the person would other­ lishment to be approved by the appropri­ wise receive $175, or $25 in excess of the ate approving agency for the state in minimum entrance wage. which the particular establishment is “A public accountant who desires to located. The name and address of the furnish on-the-job training to veterans approving agency for a particular state must qualify as an approved training may be obtained from the regional office institution. In carrying on the vocational of the Veterans Administration in the rehabilitation program under Public Law state. No. 16, regional offices of the Veterans “Under both laws, it is necessary for Administration have authority to enter the training establishment to file with into an agreement with educational and the Veterans Administration a training training institutions, including business program indicating the various activities and industrial establishments, for the and studies in which the veteran in train­ furnishing of training. If a public ac­ ing must engage and complete. In the counting establishment is found by a case of veterans being rehabilitated un­ regional office to show satisfactory der Public Law No. 16, the Veterans promise of efficiently trained veterans to Administration is required by law to the point of satisfactory employability prescribe the training program to be fol­ in public accounting as a designated em­ lowed. Such program will be worked out ployment objective, the regional office to fit the needs of the case and with due may enter into an agreement with the regard to the facilities available in the establishment to furnish such training. training establishment It is necessary Public accounting firms with offices in for all training establishments to submit more than one state may make an agree­ periodic reports concerning the absences, ment covering training in all their offices if any, of the trainee and a monthly report with the central office of the Veterans certifying to the remuneration, if any, Administration, Washington, D. C. Under paid to a veteran trainee.” Public Law No. 346 contact between a T h o m a s W. L e l a n d , veteran and the training establishment is direct. Under Public Law No. 16 all Educational Director. arrangements for selecting a veteran and placing him in training are made with American Institute Library the employer by the Veterans Administra­ Has Active Year tion. However, no veteran will be as­ signed to a training establishment without Helen M. Johnstone, librarian of the the approval of the employer. Requests American Institute of Accountants, re­ for information relating to training on ports extensive use of the library facil­ the job for veterans under Public Law ities by Institute members during the No. 16 should be addressed to the re­ fiscal year ended August 31st The fol­ gional office of the Veterans Administra­ lowing statistics suggest the scope of tion in the territory in which the training will be conducted. the library’s activities. “Under Public Law No. 346, it is pro­ Number of inquiries answered.. 13,145 vided in paragraph 4, Part VIII, Title 2, Inquiries referred to Bureau of that “From time to time the Administrator Information ...... 50 shall secure from the appropriate agency Number of visitors...... 5,302 of each state a list of the educational and Books circulated...... 2,001 training institutions (including industrial Pamphlets circulated...... 1,735 The Certified Public Accountant 9

James L. Dohr as a speaker for its meet­ Public Information Department ing of September 24th in Boston. Also, arrangements were made for Henry W. P u b l ic it y Sweeney to address the September 11th meeting of the Maryland Association A brief news dispatch announcing can­ of Certified Public Accountants in cellation of the 1945 annual meeting of Baltimore. the American Institute was sent to the press in August Clippings received in­ dicate that one of the press associations O t h e r A c t iv it ie s distributed this information to its mem­ Cooperation was given to the president ber papers. of the Colorado Society of Certified Dispatches listing nominees for the Public Accountants in the preparation of presidency and other offices in the Insti­ a letter to the editor of the Rocky Moun­ tute for the 1945-1946 term were sent to tain News of Denver in answer to an newspapers and press associations. editorial in which it criticized special Localized dispatches, several accom­ fees for accountants and others appearing panied by news photographs, were sent as expert witnesses in court cases. The to the home-city newspapers of individual letter was published in that newspaper candidates. late in August Basic reference material relating to the The American Institute of Cooperation Division of Corporation Audits of the has reprinted from the April, 1945, issue General Accounting Office was sent in a of The Journal of Accountancy an special mailing to a list of newspaper and article entitled “Terminology and Forms business - magazine correspondents in of Financial Statements for Coopera­ Washington. The material, intended for tives,” by Walter A. Bradley, chairman future use in connection with news of the committee on cooperatives of the growing out of the work of the new American Institute of Accountants. division, included an editorial on “Audits of Government Corporations” from The Letters were sent to a number of mem­ Journal of Accountancy, a general news bers of the American Institute of Ac­ memorandum, and the text of the official countants informing them that the Com­ statement of the Comptroller General an­ munist Political Association had voted to nouncing the appointment of Captain T. use again its earlier name of Communist Coleman Andrews as director of the new Party of the United States of America. division. The title of the association had on many occasions been abbreviated to “CPA” and individual Institute members had S p e a k e r s ’ B u r e a u objected to the use of these initials by At the request of a member of the others than certified public accountants. staff of the New York regional office of The American Institute and individual the United States Department of Com­ members had written to newspaper edi­ merce, notes were sent to several state tors on this point and had received in societies of certified public accountants several cases assurance that the initials within the region informing them he is would not be used. However, it was not available as a speaker on the subject of possible to avoid use of the initials in “Business Prospects During Reconver­ all cases. The change of the Communist sion.” Appointment sheets and copies Party back to its old name removes any of a letter from the speaker were sent further point in the use of the initials to the state societies. CPA The speakers' bureau cooperated with Frank A Gale, the Massachusetts Society in securing Assistant Secretary. 10 The Certified Public Accountant

"An invitation to consider joining us was extended either directly or indi­ CPA Examination Schedule rectly to every person whose name you all suggested, notwithstanding that we State accounting boards adopting felt certain that the situations of many the uniform examinations, prepared of those suggested were such that they by the American Institute of Ac­ would be unable to respond favorably. countants, will hold the regular fall As we feared, it turned out that many examinations in November, 1945, ac­ of those on your list could not consider cording to the following schedule: our proposal; but the reaction to our invitation was one of almost unanimous Wednesday, November 7th: 1:30 to enthusiasm for the program we are un­ 6:00 P.M.—Accounting Practice, dertaking and clear recognition of the Part I. unprecedented challenge and opportunity which we, and the council, we under­ Thursday, November 8th: 9 :00 A.M. stand, feel is inherent in the require­ to 12:30 P.M. — Theory of Ac­ ments of section 5 of the George bill. counts. “As a result, many of those addressed expressed a desire to be considered, Thursday, November 8th: 1:30 to mutually satisfactory arrangements have 6 :00 P.M.—Accounting Practice, been concluded with a very encouraging Part II. number, and negotiations are under way with most of the balance. Arrangements Friday, November 9th: 9:00 A.M. to also have been concluded or negotiations 12:30 P.M.—Commercial Law. started with a number of others who have written in after reading the infor­ Friday, November 9th: 1:30 to 5:00 mation given about the undertaking in P.M. — Auditing. The Certified Public A ccountant and The Journal of Accountancy. Among Dates for future examinations fol­ those employed as the result of the Insti­ low: tute’s cooperation are the Deputy Direc­ May 15, 16, and 17, 1946. tor and two of the Assistant Directors. November 6, 7, and 8, 1946. “It seems to be the universal opinion of those with whom we have been in touch that the George bill truly presents the greatest challenge the profession ever has faced and that the course taken by Audits of Government the Comptroller General to implement the authority vested in him by this bill Corporation affords at once, to the public accountant, The text of a letter just received by the fullest possible opportunity for ap­ plication of his training, experience, and the secretary from Captain T. Coleman talents and an exceptional opportunity Andrews, Director of the Corporation to pursue his profession directly in the Audits Division, General Accounting Of­ public interest fice, is printed below for the information “For our part—the part of those of us of Institute members. who are charged with the management “Having been of such invaluable help of this program—we have adopted em­ to us as you and the council of the Insti­ ployment and personnel policies which tute have, especially in suggesting the we believe will make service in the names of members of the profession who Corporation Audits Division highly at­ might be interested in joining us, you tractive from the standpoints of com­ will, we are sure, be interested in know­ pensation and opportunity within the ing what the response has been to the Division and from the further standpoint action taken on these suggestions and of preparation for positions of high re­ what the situation is now as to personnel sponsibility in private practice as well. needs. Under these policies the range of com­ The Certified Public Accountant 11 pensation is presently from $2,320 per such men will be found who, like those annum to $7,070. Under existing Civil at the management level who already Service rules that control advancement are here, are willing to forego, for in grade and pay, a top salary of $9,800 such period as will be necessary to get is ultimately attainable. the Division organized and running “The median of grade and pay is smoothly, the greater pecuniary rewards CAF-11, $4,300 per annum. Basically, of private employment for the satisfac­ our requirements for this grade and pay tion that is surely to be derived from are a bachelor’s degree, a CPA certificate, having participated in the initiation of and from 5 to 7 years of public account­ such a program as this. ing experience of progressive responsi­ “We thank you and the council again bility, or their equivalents. Requirements for the wholehearted cooperation you for grade and pay below this median have given us. The Comptroller General are retrogressively lower, and above it, and all of us are grateful for it.” they are progressively higher, of course. “Below CAF-11, positions are avail­ Veterans Committees able in CAF-5, $2,320—$2,870; CAF-7, $2,980—$3,530; CAF-9, $3,640—$4,190. Michigan Association of Certified CAF-5 is for beginning juniors, of Public Accountants, acting under the di­ course. In CAF-11 the range of salaries rection of vice-president Wallace M. is from $4,300 to $4,960. Above CAF-11, positions are available in CAF-12, Jensen, and its committee on cooperation $5,180—$6,020, and in CAF-13, $6,230— and aid to veterans, has drafted a set of $7,070. CAF-14, $7,175—$8,225, is standards for use in approving training being reserved for those of lower grade programs of employer public accountants who qualify as Field Supervisors; but under the provisions of the federal legis­ an applicant of exceptional qualifications lation for veterans. This plan for em­ may be initially appointed in this grade. ployment of veterans in public account­ CAF-15, $8,750—$9,800, is being re­ ing has the approval of the board of served without exception for promotions directors of the Michigan Association from lower grades. Initial appointments in each grade are at the minimum for the and the Superintendent of Public Instruc­ grade. The maximum for the grade is tion at Lansing. Details of the plan were the limit attainable through in-grade presented to Michigan certified public promotions. accountants in September. Elsewhere in “We need juniors, semi-seniors, this bulletin is published an excerpt from seniors, and supervising seniors, quite a Contemporary Accounting, the Institute’s number of them; and we’d be very much refresher course for public accountants, obliged if you would bring this letter to referring to the education and training the attention of the membership of the of veterans. Institute at your first convenience. In­ The committee on education of the quiries from all who have had public accounting experience or who have been Indiana Association of Certified Public educated for careers in accounting are Accountants has submitted a report on invited. Address inquiries to: Corpora­ the questionnaire mailed to public ac­ tion Audits Division, U. S. General counting firms in Indiana for the purpose Accounting Office, Washington 25, D. C. of determining the number of positions “Four positions of Assistant Director, open on accounting staffs and the number appointment to which is outside of Civil of former employees now in the service. Service, are open at $8,750 per annum, The text of this questionnaire was pub­ and this is subject to increase from time lished in the August issue of this bulletin. to time to a maximum of $9,999.99. Replies from twenty-one firms indicated These positions are reserved for men of manager or partner grade. It is realized that thirty-nine positions were open and that men of these grades usually earn nineteen former employees were in ser­ somewhat more than the amounts we vice. On the basis of these replies, the have stated, but we are hopeful that four committee estimates that positions are 12 The Certified Public Accountant open for approximately 29 per cent of the not in detail. The important considera­ total number of public accountants in tion appears to be the disclosure of the Indiana and that the number of employees amount of dollars of accounts receivable now in service represents approximately which has been assigned rather than to 14 per cent of this total. J. B. Baerncopf present a list of assignees. of Indianapolis is chairman of the Indi­ Section 9 provides that any person who ana Association’s committee. violates any provision of the act or who The Connecticut Society of Certified disseminates or publishes any financial Public Accountants recently announced statement which does not include a list the appointment of a committee on co­ of all assigned accounts of which he has operation with veterans. knowledge shall be subject to fine or im­ prisonment or both. It does not appear to State Legislation refer particularly to a public accountant since he does not disseminate or publish Charles F. Coates, chairman of the financial statements unless the report ren­ legislative committee of the Connecticut dered by him to his client, who might Society of Certified Public Accountants, be an assignor of accounts, could be so has informed the Institute that Gover­ interpreted. nor Raymond E. Baldwin has signed Mr. Coates reported that the State House Bill 1001, an act concerning as­ Bank Commissioner and the chairman of signments of accounts receivable. the legislation committee of the Connec­ The purpose of this bill is to permit ticut Bankers Association agree that banks of the State to lend money with these provisions should be amended at the assigned accounts receivable as collateral first opportunity. and to protect the banks if accounts receivable are paid directly to the as­ Selective Service Terminates signor without application to his note liability to the bank, and in the event of Certification Plan bankruptcy. Following is an excerpt from a news Sections 8 and 9 of the bill are ob­ release issued by National Headquarters jectionable to Connecticut certified pub­ of Selective Service on August 24th, an­ lic accountants. These are penalty nouncing termination of the certification sections, the first of which may refer to plan: a public accountant and the second to “National Headquarters of Selective a credit-reporting agency. Service today announced that the 17 Section 8 is ambiguous and difficult of federal agencies having jurisdiction over interpretation. Its purpose seems to have employer-supported requests for defer­ been to require a listing of all assigned ment of registrants under 30 years of accounts in the preparation of financial age have agreed to termination of the statements which included assigned ac­ certification plan, which was put into counts, but reference is made to “any effect in February of this year in order financial statement of any debtor.” The to furnish local boards with the fullest use of the word “debtor” instead of information possible as to the extent of “assignor” and the words “any financial a registrant’s value in war production statement” may make it applicable to and related activities. financial statements of any debtor in “Termination of the plan, effective Sep­ which no reference of assigned accounts tember 15th, results from capitulation would be applicable. It is the custom of of Japan and President Truman’s sub­ public accountants to indicate in the sequent announcement that monthly statements of assets and liabilities the inductions are to be materially reduced assignment of any of the accounts receiv­ and that the inductions will be confined able of an assignor in the aggregate but to registrants 18 through 25 except vol­ The Certified Public Accountant 13 unteers. As a result, National Headquar­ service on Guam, Leyte, and Okinawa. ters pointed out, there remain relatively “As auditing and administrative assistant few registrants whose deferment requests to the 77th Division Inspector General,” require supporting certification. the citation reads, “Warrant Officer Tay­ “National Headquarters said, however, lor . . . set up the accounting, auditing, that a Federal Government agency may and administrative procedures for the still file written information in support Division Post Exchange and expedited of the case of any registrant in an activ­ inspections of funds and personnel rec­ ity in which it is interested, even though ords . . . through his thorough knowledge the formal certification procedure has of administrative and auditing procedure been abandoned.” and a high degree of technical skill, he has contributed materially to the effi­ Treasury Seeks Revenue Agents ciency of administration in the Division.”

The Secretary of the Treasury requests Board of Aldermen the assistance of members of the Amer­ Maxwell E. Lerner of Hartford, Con­ ican Institute of Accountants in locating necticut, has become a member of the applicants qualified for positions as rev­ Board of Aldermen in that city. enue agents to assist the Treasury Department in its current campaign to apprehend tax evaders and strengthen the administration of revenue laws. Remuneration offered is $2,980, $3,640, William Butler of Boston, Mass., $4,300, and $5,180, depending upon edu­ died August 1st. Mr. Butler was a CPA cation and experience, plus overtime of Michigan and had been a member of compensation for work in excess of 40 the American Institute of Accountants hours per week For the lowest-grade since 1922. positions, completion of an acceptable accounting course is required. For the William Guthrie of San Francisco, higher-grade vacancies, experience in Cal., a member of the staff of Price, accounting positions is also necessary. Waterhouse & Co., died on July 11, 1945. Recruitment and examination of ap­ Mr. Guthrie was a CPA of California, plicants is conducted through the several Iowa, and Wisconsin and had been a offices of the Bureau of Internal Revenue member of the American Institute of and the United States Civil Service Accountants and predecessor organiza­ Commission, including branch offices. tions since 1914. Accountants interested should apply im­ mediately to the nearest office of the Charles G. Harris of Louisville, Ky., Bureau or the Commission. a partner in the firm of Charles G. Harris & Company, died August 1st. Mr. Harris, News About Institute Members who had served on various committees of the Institute, was a CPA of Kentucky C o n t r a c t T e r m in a t io n A p p e a l B oard and Indiana and had been a member of Henry T. Chamberlain of Chicago has the American Institute of Accountants been appointed a member of the appeal and predecessor organizations since 1909. board of the Office of Contract Settle­ ment Thomas F. Leonard of S t Louis, Mo,, died January 28th, the Institute has just B r o n z e S t a r M ed a l learned. Mr. Leonard was a partner of Warrant Officer Jerome H. Taylor of Jeff K. Stone & Co., and a CPA of Mis­ New York City has been awarded the souri. He became a member of the In­ Bronze Star Medal for meritorious stitute last year. The Certified Public Accountant

Election of Members L o u is ia n a Williams O. Webb, Monroe A r k a n s a s Joe Byrn Evans, Blytheville M a r y la n d Charles T. Brosius, Baltimore California *Philip M . Fried, Baltimore Wilmot D. Barnes, Glendale *John G. Noppinger, Baltimore * Basil J. Forbes, Burlingame *Park Roberts, Baltimore *Alton G. Harmon, Los Angeles *Stanley M . Silver, Baltimore Joseph R. Quinn, San Francisco Harry Wilhelm, Jr., Baltimore *A. A. Laurence, San Francisco *Leo Sprechman, Los Angeles M assachusetts Bowman C Ellis, Boston C o lorado Herbert Lazarus, Worcester George E. Baggs, Denver Henry C. Merriam, Boston *Russell W. Carr, Denver Lawrence E. Murphy, Boston Grant A. Wilson, Denver M ic h ig a n Connecticut *Kenneth H. Bender, Detroit *Charles L. Dudley, Bridgeport Gerson B. Bernstein, Detroit *Charles L. Lord, Winsted Leo A . Berry, Detroit George Mendelsohn, New Haven John W. Creed, Saginaw *Albert S. Roberts, East Hartford Deloss E. Gilbert, Detroit *Llewellyn A. Wilkins, Stamford †Robert L. Johnson, Ann Arbor Edwin F. Woleben, Detroit D istrict of Columbia Percy L. Caplan, Washington M in n e s o ta Joseph Lubov, Minneapolis F lo rid a Clyde B. Roe, Minneapolis Benjamin B. Goldstein, Miami Edward A. Wobschall, Rochester Seymour Satin, Miami Beach M is s o u ri I l li n o i s *John F. Bruen, Jr., St. Louis *Herbert G. Allshouse, Chicago John F. Fitzgerald, St Louis Harold E. Amsler, Chicago *Samuel J. Hazelett, St Louis John H. Andrews, Champaign *Mary J. McCann, Kansas City Frederick C Baurle, Jr., Chicago Eugene J. Moss, St Louis *Samuel S. Becker, Chicago Russell S. Wycoff, St Louis Isaac I. Bender, Chicago *Irwin J. Biederman, Chicago N e b r a s k a *Carroll H. Blanchar, Chicago *John J. Buttery, Lincoln *Charles K. Brown, Chicago Morris M. Shapiro, Omaha *John R. Dolan, Chicago Clarence L. Dyson, Rockford New Jersey Ronald G. Evans, Chicago *Edwin Alexander, Somerville Stanley Kimmel, Chicago *Nathan D. Bergman, Newark Walter N. Matthias, Chicago *Meyer B. Borks, Belleville Herman L. Miller, Chicago William N. Dorosin, Linden *Edmund J. Olsak, Chicago Joseph Gross, Hoboken *Thomas F. Pierce, Chicago Albert Oslislo, Perth Amboy *Adam P. Stack, Chicago Max Tetelbaum, Newark Rhae M. Swisher, Chicago N ew Y o rk I n d ia n a Herman A. Berg, New York Melvin A. Nelson, Indianapolis William F. Cerny, New York Hugo E. D’Aleo, New York I owa *Godfrey J. Durr, White Plains Roy W. Paulsen, Davenport *John J. Irvine, New York Morris W. Juran, New York K a n s a s *Morris Koby, New York Russell Menkemeyer, Wichita †John C Kohlrieser, New York * Admitted as associates. *Jack Levine, New York † Advanced to membership. Regis J. McManus, New York The Certified Public Accountant 15

N ew Y o rk (Cont’d ) W a s h in g to n *Irwin A. Moffet, New York *Louis H. Ford, Seattle Ira Nussbaum, New York W is c o n s in *R. William Rose, New York *James E. Burgess, Milwaukee *Fred Sandler, New York *Truman L. Holland, Milwaukee *Daniel Schmitt, Jr., New York *George K. Hood, Madison *Otto Strippel, New York *Ray A. Johns, Milwaukee Curtis E. Youngdahl, New York *J. Jay Keliher, Madison O hio *Edward F. Rothman, Madison *Harold G. deBeauclair, Cleveland *Homer L. Dillard, Hamilton *Harold L. Lippincott, Columbus *Basil J. Monroe, Cleveland State Society News *Donald J. Patton, Cleveland James Pitcher, Dayton *Howard F. Robinson, Coshocton New York State Society held its twelfth annual regional conference on O k la h o m a *John D. Carleton, Oklahoma City September 13th and 14th at Saranac Inn. *Jack A. Mascho, Oklahoma City Emphasis was placed on steps which must *Dean Penn, Oklahoma City be taken by businessmen before the end Thorwald L. Peterson, Tulsa of the year to benefit from the Tax Ad­ justment Act of 1945; new problems fac­ O regon *Howard N. Dietrich, Portland ing business as a result of the abrupt *Timothy F. Maginnis, Portland termination of war contracts and the *Paul ’L’Roy O’Connor, Portland necessity of hastening reconversion plans; and recent important developments in Pennsylvania accounting and auditing. The program John J. August, Philadelphia Albert L. Berk, Philadelphia was informal, consisting primarily of †Oliver Drummond, Philadelphia discussion groups led by members *Frank S. Betty, Philadelphia intimately acquainted with the topics Thomas P. Handwerk, Philadelphia under consideration. Tennessee Society *Joseph R Harkness, Hazelton held its annual meeting on August 23rd H. Joseph Markert, Philadelphia Nathan McClure, Philadelphia at Nashville. Out-of-state guests included James J. Murray, Harrisburg T. Dwight Williams of Oklahoma City, Joseph P. Quinlan, Philadelphia chairman of the committee on state legis­ Paul EL Trout, Lancaster lation of the American Institute of Ac­ *Edgar R Weinrott, Philadelphia Samuel L. Yaverbaum, Harrisburg countants. Charles S. Rockey of Phila­ delphia, president of Pennsylvania In­ T e n n e s s e e stitute, recently installed new officers of *Wilbur S. Connelly, Kingsport Harrisburg and Northeastern Chap­ *Charles H. Lockerby, Chattanooga ters. Louisiana Society’s committee on *Edith Moore, Chattanooga *Anson J. Robertson, Knoxville taxation sponsored a Tax Forum in New Orleans on August 9th. T e x a s New Jersey Society announces that Collins G. Bland, Dallas its accounting library comprises approx­ George E. Castiller, Houston imately 1,200 volumes including almost *Hugh L. Grove, Jr., Beeville Karl L. Huber, Dallas every known work relating to the theory *Paul H. Laverty, Fort Worth and practice of auditing, accounting, and *John M. Rack, Houston taxation. Representatives of Louisiana †Patrick F. Timmons, Houston Society were recently invited to submit *Ray B. Vaughters, Houston recommendations for revision of the state U ta h tax structure at hearings conducted by *Robert G. Blake, Salt Lake City the Revenue Code Commission. 16 The Certified Public Accountant

Outlook for Accountants’ Release mately be visited upon the profession from the Armed Forces generally. “On the other hand, if the accounting A number of inquiries recently re­ personnel of the Service can be main­ ceived at the Institute offices indicate tained substantially intact, and if con­ that practitioners are interested in learn­ tractors submit their claims promptly, ing how soon accountants now serving there is a ground to believe that by the end of this year, a formidable part of with the armed forces, either in uniform the accounting task will have been com­ or in a civilian capacity, may be re­ pleted, so as to permit thereafter an leased and become available for profes­ orderly release of the accounting person­ sional engagements. The following letter nel engaged in that task. from Commander J. S. Seidman, SC ( S) “In the case of enlisted personnel and USNR, Bureau of Supplies and Ac­ officers the point system is already in counts, Navy Department, to the secre­ operation and many are scheduled for tary of the American Institute is release by December 15th, with others published here in the belief that it may scheduled at dates soon thereafter. It will not help their morale nor sustain be of interest to Institute members. This their efficiency, if in the meantime their letter presents the writer’s personal former employers press for earlier view of the situation and does not release. necessarily reflect official policies of the “The profession may rest assured that Navy Department or any of its agen­ the uniformed personnel will be returned cies. to civil life even in advance of point- system dates, to the full extent that 28 August 1945 the work load permits. In turn, it would “Some of our personnel in the Cost be well if the people in Service got Inspection Service have been approached reciprocal reassurances from former by the accounting firms with whom they employers about reemployment consistent were previously employed, to check on with the time of their return to civil their availability for reemployment. life. That is understandable, with the Jap­ “So far as the civilians are concerned, anese surrender and with the manpower the prescribed demobilization of enlisted problem that confronts the profession. personnel and officers intensifies the im­ Because of this, I would like to explore portance of the civilians as the ultimate with you the importance of a little fur­ backbone in the Service for carrying on ther indulgence on the part of the the accounting function. Any exodus of profession. civilian accountants at this particular “From the standpoint of the account­ juncture would obviously be harmful. ing function assigned to the Service, “The accounting profession has made the immediate effect of the Japanese a splendid contribution to the war effort surrender is to increase rather than de­ in terms of the many fine men and crease the work load. The most sig­ women of its ranks that went into the nificant factor in this respect is the mass Service. I hope that nothing will mar of contract terminations and the ac­ that contribution by premature efforts to counting review that must be made of retrieve these men and women. By the resulting claims. Were the government exercise of restraint for just a few to be shorn at this juncture of a mate­ months more, the profession will enjoy rial part of its accounting talent, there the satisfaction of seeing a task well and would be many unfortunate repercus­ completely done. sions. Review of claims would suffer both “An of this merely points up the as to time and quality. This would fact that for accounting personnel m the impede the reconversion effort, which Service, the war effort is not concluded in turn would have an adverse influence until the contract - termination program on the national economy. The onus of has been concluded. I hope this point such delay and impairment in the qual­ of view can be conveyed to the profes­ ity of the accounting work would ulti­ sion for its consideration.” THE CERTIFIED PUBLIC ACCOUNTANT A Bulletin of The American Institute of Accountants

O c t o b e r 1945

SECRETARY'S NOTES the Institute art doing so many things Retiring President of the American Institute of Accountants HE new form in which this bulle­ these days that periodical reports, at the tin appears is an attempt to meet a best, can be only inadequate and outdated On October 22 Samuel J. Broad will T need which has been developing summaries of what has happened. This hand over the gavel of the Institute to his gradually for a long time. As the circula­ bulletin affords a means of giving the successor. Mr. Broad, a partner of Peat, tion of The Journal of Accountancy has members more detailed information about Marwick, Mitchell & Co., has served the increased among subscribers other than their organization’s activities, and giving Institute in many capacities since he be­ members of the Institute (there are 16,000 it as soon as things happen, when possible. came a member in 1921. Included in the non-member subscribers), The Journal has The enlarged type page has been long list of his committee activities is chair­ become a less appropriate medium for dis­ adopted because it permits more interest­ manship of the committee on auditing cussion of affairs of wholly intra-profes­ ing typographical arrangement and the procedure from 1939 to 1942. He was publication of more material at less cost. sional interest. The Certified Public Ac­ vice-president, 1939-1940, and treasurer, Comments by members on the form or c o u n t a n t , therefore, whose circulation is 1940-1944, Mr. Broad holds the CPA cer­ restricted to members and associates of the content of the new C er tified P u blic A c­ tificate of New York and of several other Institute, seems the natural vehicle for c o u n t a n t will be most welcome. Further states, and is a member of the Institute news of the Institute and the state societies, changes can be made if there seems a gen­ of Chartered Accountants of Alberta. He for comment on questions of ethics, public eral desire for them. is the author of many articles and papers accounting legislation, and similar subjects on accounting and auditing. which are of principal interest to certified Council Meeting public accountants. In the past few years an effort has been A visit to Chicago September 29 con­ made to amplify T h e C e r tifie d P ublic firmed the wisdom of the decision to A c c o u n ta n t , but wartime restrictions on cancel the annual meeting and to hold paper have limited the possibilities. The instead only a meeting of council, with new format will not only provide more state society presidents and representa­ space, but will permit attempts to make tives of other groups, which will in effect the material more readable. be a convention of delegates. Transporta­ There will be room in this new bulletin tion, as most accountants know, is not yet for the opinions of readers, and as much easy to get, in spite of the fact that ODT space as necessary will be devoted to let­ regulations have been relaxed, and Chi­ ters from members on subjects of general cago hotels seem to be hopelessly over­ professional interest. There will be more crowded and likely to stay that way in­ space available, too, for information about definitely. Large conventions do not seem the men and women in the profession practicable for some time to come, unless who are doing things. In an organization those who attend are prepared for much of more than 9,000 members it is impos­ discomfort and inconvenience. sible to become personally acquainted Institute committees and staff are con­ with them all. We hope now to help centrating on preparation for the council members widen their acquaintances. meeting October 22 and 23. Many im­ The officers, committees, and staff of Samuel J. Broad, New York portant questions of policy will come up 2 The Certified Public Accountant

for consideration, relating both to internal affairs and to relations with outside or­ The Victory Loan ganizations. An advance program of the meeting is reprinted elsewhere in this The following letter was addressed to redoubling their efforts in helping to make bulletin. A full report of matters con­ the Institute by the Professional Associa­ this Drive the most outstanding of all. sidered will be sent to all members and tions Section of the Treasury Department “Make this Victory Loan a memorable achievement by: associates after the meeting. requesting the participation of the account­ ing profession in the Victory Loan: “(1) Publicizing it extensively in your Accounting and Law magazines and bulletins. In a recent decision of the Supreme “As we prepare for the last organized “(2) Soliciting your members to buy Court of the State of Washington, on the Drive of the greatest War Finance Pro­ Bonds, themselves. gram in history, may we again feel as­ question of admission of a veteran to prac­ “(3) Urging each member to cooperate sured that we have the pledged coopera­ tice law, the court discussed the evolu­ with local war finance committees tion of every professional association in in promoting the sale of Victory tion of requirements for admission to the the United States? Bonds. bar, and made the following observation: “The success of the Treasury’s War “For example, in view of the develop­ Finance Program to date can be credited “We shall appreciate receiving copies of ments of very recent years, we doubt that to the willingness of patriotic Americans your periodicals and reports of what your any lawyer would advise his son to em­ who, like yourself, have given generously members are doing, so that we may pub­ bark in the general practice of law with­ of their time and energy in each of the licize this information to similar groups. out acquiring at least a working knowl­ War Loans. “The Victory Loan begins October 29th, edge of the theory and practice of account­ “We are grateful for this aid in past and ends December 8th. The over-all ing.” Drives, and are confident that, during the quota, corporate and individual, is $11 billion. The quota for individuals is $4 The Virginia State Bar recently pro­ Victory Loan, when we are faced with an even greater selling job than ever billion—$2 billion for E-Bonds alone. posed an amendment to the rules of the before, every association and its members “THEY FINISHED THEIR JOB— State Corporation Commission providing will answer our appeal for assistance by LET’S FINISH OURS!" that appearances before the Commission be limited to members of the Bar. The proposal was the subject of public hear­ BUREAU EXAMINATION OF This does not mean, however, that they ings, at which opposition was expressed WORKING PAPERS are confidential communications. Our counsel has advised us in the past that in by a number of members of the Bar and The following question, recently re­ the absence of statutory privilege, public representatives of organizations of lay­ ceived from a member of the Institute, accountants may be required to produce men, who under the present rules are is of general interest: their working papers under subpoena for permitted to appear before the Commis­ examination by the courts. “Recently I have been informed that sion. Accountants were not concerned. “In the Prentice-Hall 1945 Federal Tax the Internal Revenue Bureau insists upon The Commission decided not to adopt the Service, Volume 3, Paragraph 21,315, we examining accountants and demanding find the following: proposed amendment. their confidential working papers relating Labor View of Professional Standards to their clients’ affairs. “ ‘Section 1104 of the Revenue Act of 1926 “I would appreciate advice from you as (Sec. 3614(a), IRC, Par. 21,302) authorizes On the radio program, American Forum to whether there has ever been any deci­ the Commissioner, by an agent designated for the purpose, to require the production of of the Air, July 31, Ted F. Silvey, chair­ sion or ruling from some authoritative man of the reconversion committee, CIO, the books and records of one person bearing source holding that working papers and upon the tax liability of another person made the following statement: confidential papers in the possession of under investigation. (Brownson v. U. S. “This matter of being admitted to a accountants are privileged, and whether (CCA-8), 32.F.(2d) 844, 7 AFTR 8748, medical college or getting into the public or not they are confidential communica­ Ct.D. 64, CB June 1929, p. 192. Taxpayer accountants’ profession when one or two tions.” held not entitled to order restraining ac­ firms control how many pass the exami­ countant from divulging information ob­ The Institute’s office responded as fol­ nation each year, is not a union question. tained as employee. Eckerling et al v. Hel­ Most of these veterans are members of lows, with the assistance of counsel: vering et al. (D.C., Ill. 1940), 29 AFTR 1295.)’ unions, and we are interested in protect­ “Communications of public accountants ing them (that is our job) in their eco­ are not privileged at common law. In a “Eckerling v. Helvering, 29 AFTR 1295 nomic status.” few states, the accountancy acts specifically (N. J. Dist. Ct. N. D. Ill.) 1940. The remark was made in a discussion provide that such communications shall “On motion of plaintiffs for order re­ of seniority requirements. It indicates an be privileged. straining Jacob W. Cohen, a CPA in outside viewpoint of professional stand­ “Williston lists the states which give Chicago, from divulging to the BIR agent ards not dissimilar to that encountered in privileges to an accountant as Colorado, information or evidence obtained by him some state legislatures. It points up a need Florida, Illinois, Iowa and New Mexico. from plaintiffs in his capacity as the “The Supreme Court of Massachusetts for an educational program to let the public accountant employed by plaintiffs held in Ipswich Mills v. Dillon, that ac­ and restraining the BIR agent from re­ public know that professional standards countants’ working papers are the property quiring the accountant to divulge such are designed for its own protection. of the accountant, and that he is not information. J. L. C. obliged to surrender them to his client. “Judge Holly made the following con- The Certified Public Accountant 3 clusions of law (no opinion) in denying the motion. Professional Ethics

“‘2 . Section 19 of Chapter 110½ of the Partnerships between Lawyers and men under Patent Office rules. We said Illinois Revised Statutes, relating to testi­ there: mony of public accountants, does not confer Accountants any privileges or make privileged any evi­ In response to a question concerning “We have held that certain activities con­ dence, documentary or otherwise, which is partnership between a lawyer and an stitute the practice of the law when engaged in the possession or knowledge of the said in by a lawyer despite the fact that those defendant, Cohen, when the said defend­ accountant, the professional ethics com­ activities may lawfully be engaged in by one ant, Cohen, is directed by a valid summons mittee of the American Bar Association not a lawyer. A lawyer may properly enter of the Commissioner of Internal Revenue, or expressed the following opinion, which into partnership with a layman if the ac­ his agent, to appear and testify. was published in the September 1945 issue tivities of the partnership and of the lawyer “ ‘3. The plaintiffs herein are not entitled member are confined to those which may to the restraining orders sought by them, in of the American Bar Association Journal: be carried on by the layman, provided the view of the fact that the parties herein have lawyer renounces or refrains from holding other adequate remedy, the remedy available “Opinion No. 269 himself out as a lawyer and from carrying on to the defendant, Cohen, being the right to (June 21, 1945) any activities which may not properly be object to produce evidence, documentary or “Partnerships—Division of Fees— A partner­ carried on by the layman (see Opinion No. otherwise, after having appeared before the 239). Thus, if a lawyer goes into a partner­ ship between a lawyer and a layman ac­ said defendant, Loyd, pursuant to sum­ ship conducting an accounting or a collection countant to specialize in income-tax work mons.’ ” and related accounting is permissible only business, he can no longer with propriety continue to hold himself out as a lawyer or if the lawyer ceases entirely to hold him­ continue to practice law. The accounting self out as such and confines his activities and collection business are fields open to lay­ "SURPRISE" AUDIT strictly to such as are open to lay account­ men, and this is so even if these activities REQUIREMENT RESCINDED ants. involve necessarily a limited degree of legal On September 10, Verne C. Bonesteel, Canons involved: 33, 34, 35, 47 knowledge. Opinion 257 chief examiner of the Federal Home Loan “We desire to emphasize that the law­ Bank Administration, addressed a letter “The committee is asked to express its yer in the instant case and in like lay to all public accountants who, according opinion on the following questions: partnerships must completely disassociate to the records of the Administration, had “A is an attorney-at-law and a certified himself from any practice or holding audited the accounts of insured savings- public accountant. Can he be employed by out that would indicate that he is a mem­ ber of the bar or in any way engaged in and-loan associations during the past two an accounting firm which specializes in income-tax work performing such work practice as a lawyer. If, for example, he years. This letter announced the rescis­ which necessarily includes accounting and prepares a tax claim, his employer must sion of Section 3 of Orders issued by the law work in the preparation of income-tax understand that he is not acting as a mem­ Administration and the Federal Savings returns and the presentation of cases before ber of the bar, but solely as an accountant. and Loan Insurance Corporation Septem­ the U. S. Treasury Department? All income- In our opinion Canon 33 does not apply tax cases have mixed questions of account­ to a member of the bar who restricts his ber 11, 1944, which required that all ing and law in so far as income taxes (law) audits of insured savings-and-loan asso­ are concerned. Can A be a member of an activities as above indicated, but only to ciations be made on a surprise basis. In accounting firm as a partner? one who holds himself out as a lawyer previous correspondence with Mr. Bone­ “B is an attorney-at-law, with knowledge and at the same time engages in a type of of accounting. Can he be employed by an activity open to laymen which serves as a steel, the Institute’s committee on savings- accounting firm of certified public account­ natural feeder to his law practice. and-loan accounts took the position that ants and perform the work outlined in the “With respect to listing in a law list we the “surprise” element in an examination above question? Can such an attorney-at-law held in opinion 257 that an asterisk oppo­ of a building-and-loan association is not appear before the U. S. Tax Court repre­ site the name of the lawyer member of a normal auditing procedure. senting a client of such certified public ac­ countant assuming (a) he is not a certified such a partnership could not be used to The necessity for making a cut-off in public accountant (b) he is a certified public indicate that he had been admitted to advance of or subsequent to the date as accountant and is admitted to practice before practice, and that we re-affim.” of which the audit is being made and the Tax Court? Confidential Relationship with Clients reconciling accounts to this other date, in “The opinion of the committee was order to meet the requirement of main­ stated by Mr. Jackson, Messrs. Brand, The New York State Society of CPA’s taining the element of surprise, has also Drinker, Hostetler, Houghton, Powell has recently amended its rule on confiden­ been eliminated, the chief examiner an­ and Shackleford concurring. tial relations with clients, which now nounced. In his letter, Mr. Bonesteel “This committee has no jurisdiction to reads as follows: expressed the belief that every public deal with questions of law or unauthor­ accountant should be familiar with the ized practice. Accordingly, our opinion is “The relationship between a member and his client is confidential in character program outlined in the Institute’s pub­ limited to the problems of ethics involved and, therefore, a member shall not dis­ lication, “Audit of Savings and Loan in the above questions. “In opinion 257 we held that a lawyer close information acquired in the course Associations by Independent Certified may enter into partnership with a lay of a professional engagement to anyone Public Accountants.” The full text of his patent agent licensed by the United States other than his client without the consent letter will be reproduced in the November Patent Office if the partnership activities of the client except as required by law or issue of The Journal of Accountancy. are limited to such as are permitted lay­ with the consent of third parties whose 4 The Certified Public Accountant

“R esolved, That the committee on state accounts are examined at the request of a graph of the Rules of Professional Con­ legislation be instructed to oppose legisla­ client.” duct as set forth in Article XVIII of the By-Laws. tive proposals of the type described in this The Institute’s rule was adopted only “In case an accountant has supplied a resolution.” about two years ago. It reads as follows: client or former client with copies which The rules of professional conduct do not have been lost or mislaid by such client, expressly prohibit the use of the words “A member or an associate shall not it is the opinion of the committee, that “and Company” by a member of the In­ violate the confidential relationship be­ the accountant, upon request of the client, tween himself and his client.” should supply copies of the returns and stitute in practice on his own account, without partners. The use of such style Up to that time the code contained no may make a reasonable charge for the actual time required to prepare the copies.” has been questioned on the ground that it reference to the confidential relationship. implies the existence of a partnership and Some members of the Institute’s council therefore might be misleading. The rules argued that the concept was so funda­ Ethical Considerations Respecting Choice of Name for a Firm of of practice of the Treasury Department, mental that no specific rule was necessary, Public Accountants Circular No. 230 (as revised to October but the majority concluded that specific 23, 1941), Section 2, paragraph (e), con­ Prepared by the Institute's committee on reference would be desirable. tain the following provision: The Institute has inquired of a few professional ethics firms as to what measures are taken in “Every enrolled attorney or agent prac­ The purpose of this memorandum is to practice to guard against the divulging of ticing as an individual shall use his legal indicate the principles that should be ob­ confidential information. One accounting name in the conduct of his legal, account­ served by certified public accountants in firm requires a formal statement or affi­ ing, or other professional practice. The partnership in choosing a firm name and term ‘company,' ‘associates,’ ‘accountants,’ davit by each employee to the effect that style for the partnership. ‘auditors,’ ‘engineers,’ or other plural h e will not disclose confidential informa­ The name of a firm of practicing ac­ forms suggesting a partnership or lan­ tion. countants should denote a personal asso­ guage of similar import, used in connec­ Another firm makes use of an employ­ ciation. Such a firm should not adopt for tion with a name or title, or any fictitious ment contract in which there is a ref­ its name any non-personal or misleading title, or trade name, shall be used only erence by way of reminder of the neces­ title. A corporate form of name would not by a bona fide partnership consisting of two or more members, and all stationery, sity of protecting confidential information. be appropriate as the name of a firm of Many firms apparently rely on the pro­ listings, advertisements, and announce­ professional accountants. ments of enrolled persons shall conform fessional integrity of their employees and Inclusion in the firm name or the name to the principles herein stated.” on reminders of the importance of the of a former partner or former partners has matter by means of staff-training pro­ been held by the council of the American Advertising grams, staff manuals, and personal ad­ Institute of Accountants to be entirely In its annual report for 1945, the ethics monition. appropriate. The following resolution was committee of the Colorado Society of adopted by council in 1943: CPA’s expressed the opinion that the Clients Entitled to Copies of name of a member or of an associate Tax Returns “W h ereas, The American Institute of Accountants committee on state legis­ placed upon an outside window con­ Following is a statement by the com­ lation has requested the council of the In­ stitutes advertising and is therefore in mittee on professional conduct of the New stitute for an expression of opinion as to violation of the Society’s Code of Ethics. York State Society of CPA’s, approved by the Institute’s policy toward legislative the Society’s board of directors and pub­ proposals which would prevent continua­ • Public Hearing in Missouri lished in the July 1945 issue of The New tion of a firm name containing the names of former partners who have died or who Under the provisions of Section 14,911L York Certified Public Accountant: have withdrawn from the partnership, of the Missouri Statutes regulating the “The committee on professional con­ and practice of public accounting within the duct has received inquiries from former “W h ereas, Said council of the Amer­ State, the Missouri State Board of Ac­ clients of members as to whether they are ican Institute of Accountants believes it countancy announces that it will hold a entitled to receive from their former ac­ desirable that the policy of the Instiute on public hearing at the Governor Hotel, this question be recorded; countants, file copies of tax returns or Jefferson City, Missouri, on December 1, “N ow T h e r e f o r e Be It R e s o lv e d , other documents prepared for submission 1945, for the purpose of adopting reason­ to federal, state, or municipal taxing or That in the opinion of the council of able standards of professional conduct and regulatory authorities if they have at no the American Institute of Accountants time received such copies from the ac­ neither the public interest nor the inter­ reasonable rules defining unethical prac­ countant during the course of the engage­ est of the accounting profession as a tice of public accountancy. A copy of whole would be served by legislation ment. the proposed rules and regulations was “It is the opinion of the committee that preventing the use by public accounting mailed to all holders of certificates issued the failure to provide copies of such re­ firms of firm names or titles which con­ under the provisions of the Missouri law tain the names of partners who have died turns is discreditable to the members con­ regulating the practice of public account­ or withdrawn from the firm; and be it cerned, embarrassing to businessmen and ing. -constitutes a violation of the final para­ further The Certified Public Accountant 5

ACCOUNTING EDUCATION lic accounting firms. It provides them Committee on Education with additional assistants during the busy period. They can appraise students’ abil­ John W. Queenan, chairman of the ities and improve their chances of obtain­ committee on education, and Henry T. ing better men. It offers them better Chamberlain, chairman of a special com­ trained students for employment after mittee of the American Accounting Asso­ graduation. The conference recognized ciation, have prepared a detailed report the difficulties encountered by colleges in of the educational conference which was adopting the quarter system and in mak­ held in Chicago in June. The report in­ ing arrangements for students to leave cludes discussions relating to curricula, schools for practical experience at times special training for returning war veterans, other than during the summer, but both use of the quarter system to permit ap­ educators and practicing accountants be­ prenticeship training of accounting stu­ lieve that practical experience contributes dents during the winter months, staff effectively to a student’s education. education, and information on the public The conference report stresses staff train­ accounting profession available to account­ ing programs of public accounting firms ing students. in meeting the weakness of educational The following conclusions relating to preparation in auditing. It suggests that curricula are presented in the committee a considerable portion of the training report: program should be devoted to studying (1) That a student majoring in account­ working-paper preparation and auditing ing should be trained with the thought programs and procedures. It mentions the that he may eventually become a prin­ Victor H. Stempf, New York need for instruction in report writing and cipal or partner of a professional account­ public speaking, and for informing new ing firm or a controller of an industrial Mr. Stempf was a member of the Commit­ employees as to firm policies and pro­ organization rather than for the perform­ tee on Postwar Tax Policy, whose 275-page cedures. ance of the more routine auditing or report titled “Tax Program for a Solvent An interesting feature of the report is accounting functions. America” was released last month. Mr. (2) That it is impracticable to separate Stempf was appointed to the Committee after the suggestion that accounting instructors, training for public accounting from train­ he became president of the Institute, nearly especially the younger ones, should be in­ ing for industrial accounting during the two years ago. Funds for the Committee’s vited to attend certain staff-training pro­ undergraduate period; that special train­ work were provided by the Falk Foundation. grams, to provide them with information ing for public accounting can be practical The chairman was Roswell Magill, former which might help them to eliminate some only in graduate work or in special elec­ Undersecretary of the Treasury. Other mem­ of the weaknesses of college instruction in tive courses during the senior year. bers were Fred R. Fairchild, Knox Professor accounting. (3) That, generally, college training in of Economics, Yale University; Rowland R. accounting principles is satisfactory with Hughes, Controller, National City Bank of the possible exception of a need for more New York; Thomas N. Tarleau, former Board of Examiners collateral reading to broaden students’ con­ Legislative Counsel, Treasury Department. The board of examiners, at its Septem­ cepts of principles. The Committee’s report presents a carefully ber 11 meeting, reviewed reports on the (4) That the principal weakness in tech­ documented postwar federal tax program. nical training is in the field of auditing. May 1945 examination and gave consider­ (5) That in addition to the usual com­ ation to plans for the November 1945 and mercial law courses there appears to be subsequent examinations. Considerable a need for training in the fundamental portance to the profession as to warrant progress in the preparation of the May laws of evidence as they relate to accounts further study and consideration by edu­ 1946 examination was reported by sub­ and records, and that the relationship of cators and practicing accountants. Appren­ committees. evidence and auditing should be stressed The board voted to accept, in lieu of in the study of auditing. ticeship training gives the student his first a law examination given by a state, the (6) That, in addition to technical sub­ actual contact with documentary evidence jects, more attention should be given to and a knowledge of the nature of public bar or other legal examination of that English—the ability to write and speak accounting. It helps him decide what state in commercial law, provided that correctly and fluently—and to training in career he should follow and helps to examination is acceptable to the state board public speaking. place him after graduation. The experi­ of accountancy. The recent accountancy (7) That college students are particu­ ence contributes to the development of act of Texas, which exempts lawyers larly deficient in their ability to read the student and motivates further academic from the requirements of an examination clearly and precisely. work because of his better understanding in commercial law in qualifying for the The report also states the opinion of of the applicability of accounting theory CPA certificate in Texas, was the occasion the conference that the adoption of the and related subjects. for this decision. quarter system in colleges is of such im- The plan has many advantages to pub­ The board voted to refer the question 6 The Certified Public Accountant of recognition of accounting experience the Institute for states and territories ACCOUNTING RESEARCH with the armed forces to the Association which choose to adopt it. Statements of Financial Position of Certified Public Accountant Examiners. The examination awards were estab­ T. Dwight Williams, first vice president lished by the American Institute of The recently issued annual report of of the Association, who was present at Accountants in 1924 in honor of the late The Duplan Corporation reveals that the the meeting, stated that the subject would Elijah Watt Sells. Gold and silver medals company has substituted a statement of be placed on the agenda of the next meet­ go to the two candidates receiving the financial position for the more conven­ ing of the Association. highest and second highest grades, respec­ tional balance-sheet. The use of two tively. facing pages for the statement permits the Public Accounting as a Career Usually the winners of these medals have display of current assets and current liabil­ been invited to attend the annual meeting ities, working capital, and the current The committee on selection of personnel of the Institute, but this year the state ratio on one page. On the opposite page, has voted to finance the printing of 25,000 boards and the state societies of Iowa and fixed and other assets are added to the copies of the pamphlet, “Public Account­ Missouri will be asked to participate in working capital brought forward, notes ing as a Career.” This pamphlet was the presentation of the awards. payable and reserve for contingencies are prepared by the committee on education. As previously announced, the gold medal deducted, and the excess of assets over Arrangements are now being made for in the November 1944 examination was liabilities and reserves explained as rep­ printing and for distribution of the awarded to Norman G. Currin, Detroit, resented by common stock and surplus. pamphlet as soon as copies are available. Michigan, and the silver medal to Francis A similar statement was presented in the The pamphlet includes sections on John Weitekamp, Chicago, Illinois. 1944 annual report of the Caterpillar choosing a career, public accounting a Tractor Company. field to consider, accounting a major fac­ T h o m a s W. L e l a n d tor in business, the work of the public Educational Director Quasi-Reorganizations accountant, demands of the profession, re­ The September meeting of the commit­ wards and opportunities, general condi­ tee on accounting procedure provided an tions of public accounting work, person­ opportunity for an extensive discussion of nel classification and responsibilities, CPA Examinations quasi-reorganizations and of their account­ remuneration, requirements for success in ing treatment. The position of the com­ the profession, and accounting societies. State boards of accountancy adopt­ mittee in respect to these problems is Copies will be made available to high ing the uniform examinations pre­ expressed in the following resolution schools and colleges, to veteran agencies pared by the Institute will hold the unanimously approved by the members and counselors, to members of the Amer­ November 1945 examinations as fol­ present: ican Institute of Accountants, and to lows: members of the American Accounting “(1) That the committee recognizes the Wednesday, November 7—1:30 to Association. practical necessity at times of establishing 6:00 PM — Accounting Practice, bases of accountability for assets other Part I. than cost to a corporate owner. Elijah Watt Sells Awards Thursday, November 8—9:00 AM “(2) That the committee sees no ac­ to 12:30 PM—Theory of Accounts. counting reason why such new basis may The board of examiners, at its Septem­ Thursday, November 8 — 1:30 to not be accomplished by a quasi-reorgani­ ber 11 meeting, selected the following 6:00 PM — Accounting Practice, zation where it could properly be accom­ candidates to receive the Elijah W att Sells Part II. plished by the formation of a new awards for excellence in the May 1945 Friday, November 9—9:00 AM to company. CPA examination: 12:30 PM—Commercial Law. Friday, November 9—1:30 to 5:00 “(3) That the presumption is in favor First prize (gold medal) PM—Auditing. of continued use of cost and therefore re­ Herbert E. Miller, Minneapolis, Min­ adjustments should be supported by con­ nesota (Iowa candidate) vincing evidence and be effected with due Second prize (silver medal) Examination dates for the next formality. Peter Hochschild, St. Louis, Missouri two years will be as follows: “(4) That a quasi-reorganization is a Honorable mention procedure recognized in accounting by May 15, 16, and 17, 1946 Mary Helen Mathieson, Evanston, Illi­ which the accounts of a corporation may November 6, 7, and 8, 1946 nois (Montana candidate) be restated to the same extent as they properly would be if a new corporation Honorable mention May 14, 15, and 16, 1947 were created and acquired the business of John R. Larimer, Oak Ridge, Tennessee. November 12, 13, and 14, 1947 the existing corporation. A quasi-reorgani­ May 19, 20, and 21, 1948 A total of 1,557 candidates took the zation establishes a new basis of account­ November 17, 18, and 19, 1948 ability for assets and liabilities.” - uniform examination in May in forty-two states, the District of Columbia and four May 18, 19, and 20, 1949 It is the opinion of the committee that November 16, 17, and 18, 1949 territories. The uniform examination is the concept of accountability for the assets prepared by the board of examiners of and liabilities of a business affords a use­ The Certified Public Accountant 7 ful basis for determining the conditions Letter to Attorney General of Arkansas trip”—that is, the war expenses or losses and circumstances in which a corporation of a company in existence before the war At its May meeting, the committee on may decide to effect a quasi-reorganization would include the costs of converting to accounting procedure considered and an­ war production, the costs of such produc­ as well as a basis for the accounting treat­ swered six questions propounded to it tion, and the costs of reconverting to ment required to reflect that corporate by the Attorney General of the State of decision. This opinion reflects the view peacetime production. However, the sub­ Arkansas. The questions related to ac­ committee does not believe that a “round that, although the concept of a quasi­ counting matters involved in a public- trip” may properly include costs of estab­ reorganization is one involving a number utility case before the Federal Power Com­ of accounting principles or conventions, a lishing new types of production or mar­ mission in which the State of Arkansas decision to effect a quasi-reorganization kets or that a similar accounting on a is interested. At its September meeting the must rest on other, non-accounting factors “trip” basis can be often justified during committee considered and approved a final and considerations. The committee is cur­ peacetimes. draft of a letter embodying its opinions. rently working on a bulletin giving expres­ The letter has been released for publica­ sion to the positions reflected by its tion. Professional Meetings resolution. Surplus Charges and Credits Arrangements have been made with Inventory Pricing chapters of various state societies for meet­ The accounting staff of the Securities ings at which committee members and In the preparation of a statement relat­ and Exchange Commission was the host the director of research may discuss cur­ ing to inventory pricing, the subcommittee at a meeting of representatives of the rent problems in accounting and auditing. is faced with the difficult problem of Institute, the Controllers Institute, the The speakers at meetings which have been providing an adequate definition of in­ American Accounting Association, the held, and those scheduled, are as follows: ventory cost. Theoretically, of course, cost National Association of Cost Accountants, may be said to include all direct and and others, called to discuss the purpose of September 24th, Massachusetts Society indirect charges incurred in bringing the the income statement and the use of direct of CPA’s, Boston, James L. Dohr. inventory item to its existing stage, status, charges and credits to surplus. George D. September 26th, Philadelphia Chapter or condition and location. But the useful­ Bailey, chairman of the Institute’s commit­ of the Pennsylvania Institute of CPA’s, ness of such a definition, when there are tee on accounting procedure, and the direc­ Carman G. Blough. many practical considerations which neces­ tor of research, who had been selected to September 27th, annual meeting of the sitate the determination of inventory “cost” represent the Institute, presented the opin­ Ohio Society of CPA’s, Cleveland, George D. Bailey and A. Karl Fischer. on some more limited basis, has been ion of the committee that charges and questioned. The subcommittee would ap­ credits should be made directly to surplus October 1st, Kansas City Chapter of the Missouri Society of CPA’s, George D. preciate suggestions for a rational recon­ in appropriate circumstances. This view Bailey. (Because of grounded planes, Mr. ciliation of these theoretical and practical was also expressed by other representatives extremes in some useful statement of in­ Bailey was unable to reach the meeting at the meeting. place. His paper was read and discussed ventory cost. in his absence.) Accounting for Expenses and Losses Accounting for Fully Amortized October 2nd, St. Louis Chapter of the Arising out of the War Missouri Society of CPA’s, George D. Facilities The research department is preparing Bailey and Carman G. Blough. A problem related to that of accounting a preliminary statement on accounting for October 8th, District of Columbia Insti­ for war expenses and losses is that of the expenses and losses of. war operations. The tute of CPA’s, Carman G. Blough. proper treatment of properties having sub­ purpose of the statement is to review some October 8th, New York State Society of stantial usefulness and value, the costs of of the problems involved, particularly those CPA’s, New York, James L. Dohr. which were amortized during the war related to the treatment of reserves set up November 10th, Georgia Society of period at rates permitted for tax purposes during the war years, and to suggest a CPA’s, Atlanta, Carman G. Blough and by Section 124 of the Internal Revenue basis for their solution. A subcommittee C. Oliver Wellington. Code. In a discussion of this problem at of the committee on accounting procedure November 15th, Pittsburgh Chapter of the recent meeting of the committee on which has been considering these problems the Pennsylvania Institute of CPA’s, Car­ man G. Blough and Warren W. Nissley. accounting procedure, it was the consen­ has suggested that the period of war oper­ sus that, in cases involving material ations of a business be viewed as a special C a r m a n G. B lo ugh amounts of such facilities, an adjustment venture in order that the income state­ Director of Research. of the excess depreciation charged may be ments of postwar years may reflect as necessary in order to present properly the adequately as possible only the revenues LAWYERS AND ACCOUNTANTS expenses and losses attributable to war and expenses of those years. Another operations. Proper determination of ex­ suggestion of the subcommittee is that, in The National Conference of Lawyers penses attributable to future operations is, determining expenses and losses applicable and Certified Public Accountants will of course, also related and possibly more to war revenues, war operations should hold its semi-annual meeting in Cincin­ important. be considered in the sense of a “round nati, Ohio, on Saturday, December 15. 8 The Certified Public Accountant

PROPOSED OPA FORM A-1 Reconstruction Finance Corporation; John tion; Henry P. Seidemann, The Brookings B. Payne, Controller, U. S. Commercial Institution; John J. Haggerty, Post Office The “panel on Forms A and B of the Company, Foreign Economic Administra­ Department. OPA” of the Advisory Committee on Government Questionnaires met in the office of the Institute September 14. In addition to members of the panel, the Council Meeting in Chicago meeting was attended by representatives Following is an outline of the program Board of examiners: of the OPA and representatives of the for the meeting of council, October 22 and Request for clarification of by-laws govern­ Division of Statistical Standards of the Bu­ ing experience requirements for admis­ 23, and also a summary, based on infor­ reau of the Budget. C. Oliver Willington sion of members and associates. represented the Institute. The meeting was mation submitted by committee chairmen, Professional ethics: concerned particularly with an examina­ of matters to be brought before the coun­ Proposed amendment to rules of conduct tion of the proposed Form A-1 of the OPA cil for consideration and action. In order on listings in directories (see September Certified Public Accountant, page 3). which will be used for reporting by retail to avoid too much detail in this outline, Accounting procedure: and wholesale establishments. It was re­ no attempt has been made to summarize committee reports of activities of the past Report on questions of accounting proce­ ported by the executive secretary of the dure arising in public utility cases, pur­ year unless they raise some question re­ Committee, after the meeting, that a num­ suant to resolution of council adopted ber of improvements were made in the quiring council’s attention. at the May 1945 meeting. form and its accompanying instructions by Bankruptcy: Monday, October 22 mutual agreement among the Bureau, 1. Proposal for endorsement of HR 3338, 9:30 AM—Joint meeting—Council, Advis­ establishing a system whereby referees OPA, and the panel. ory Council of State Society are placed on a salary basis and their Presidents, representatives of offices brought within the framework of American Accounting Associa­ the federal judiciary. GOVERNMENTAL ACCOUNTING tion, officers of Association of 2. Proposal for change of name of the CPA Examiners, chairmen of committee on bankruptcy to committee AND AUDITING Institute committees. on bankruptcy and reorganizations. 12:30 PM—Luncheon—Guests of the Illinois Education: The unofficial committee on federal Society. Suggestion as to possibility of continuing government accounting and auditing, of 6:30 PM—Dinner—Guests of the Ameri­ program of adult education for account­ which George P. Ellis of Chicago is chair­ can Institute. Brief remarks by ants under sponsorship of professional man, met in Washington, D. C., October Samuel J. Broad, president; Brief societies. 11. remarks by C. F. Elderkin, presi­ Public information: ident, Dominion Association of Proposal for resumption of the series of The committee was formed by the In­ Chartered Accountants; brief re­ public information pamphlets discontin­ stitute in response to a request by Senator marks by T. Coleman Andrews, ued during the war period. director, Corporation Audits Di­ Harry F. Byrd of Virginia, and its pur­ State legislation: vision, GAO. pose is to cooperate informally with Sena­ 1. Proposed program of activity in prep­ aration for possible attacks on CPA tor Byrd and others in offering construc­ Tuesday, O ctober 23 laws. tive recommendations for the improve­ 10:00 AM—Fxecutive session — Council, 2. Question of desirability of modifying ment of procedures in federal accounting. American Institute. CPA requirements for veterans. Executive session — Advisory Three subcommittees reported progress, Advisory Council’s committee on coordina­ Council of State Society Presi­ and the general nature and content of a tion: dents. report of progress to be submitted to Sena­ A proposed plan of coordination of activi­ 12:30 PM—Luncheon—Guests of the Insti­ tor Byrd and the Institute was considered. ties of state societies and the Institute, tute. to be put into effect beginning January Members of the committee are: George 2:00 PM—Possible joint meeting Institute 1, 1946. P. Ellis, Lloyd Morey, and Leland G. council and Advisory Council, National Conference of Lawyers and CPA’s: Sutherland, members of the Institute’s or continuation of executive ses­ A report on matters under consideration sions. committee on governmental accounting; by National Conference. 2:00 PM—Meeting Association of CPA Ex­ T. Coleman Andrews, Director, Corpo­ aminers. Informative reports containing much rate Audits Division, GAO; E. F. Bartelt, material of general interest will be submit­ Commissioner of Accounts, United States Outline of Matters To Be Submitted ted by the committees on state highway Treasury Department; R. H. Slaughter, for Consideration of Council construction contracts, auditing proce­ Assistant Chief of Investigations, General Executive committee report: dure, cooperation with bankers, federal Accounting Office; J. Weldon Jones, As­ 1. Proposed resolution advocating estab­ taxation, governmental accounting, inde­ sistant Director in Charge of the Fiscal lishment of a non-partisan tax commis­ pendence of accountants, membership, sion. Division, Bureau of the Budget; W. R. publication, refresher courses, selection of 2. Recommendation for enlargement of Quigley, Assistant Director, Office of Bud­ council. personnel, savings-and-loan accounts, and get and Finance, Department of Agricul­ 3. Recommendation that 1946 annual termination and renegotiation of war ture; Nathaniel Royall, Chief Auditor, meeting be held in New York. contracts. The Certified Public Accountant 9

PUBLIC INFORMATION Society and Maryland Association were A communication to the editor of the sent to Madison and Baltimore for dis­ Encyclopaedia Britannica, pointing out tribution to the press. that the American Institute of Accountants Letters were sent to the chairmen was not included in its Year Book list of state boards of accountancy suggesting and descriptions of national professional that they, with the cooperation of state societies, resulted in a request for a brief societies, make arrangements for present­ outline of the work and purposes of the ing to the winners, in person, the Elijah Institute. This manuscript was sent to Watt Sells gold and silver medals for the the editor, and will be published in the highest marks in the May 1945 CPA ex­ 1946 Britannica Book of the Year. amination. These ceremonies would take the place of the presentation originally News material announcing the confer­ planned for the 1945 meeting of the ences of representatives of the committee Institute, which was canceled. on accounting procedure with state society groups was sent out, together with pic­ Special news announcements listing tures of speakers. Chairmen of the con­ nominees for the presidency, and other ferences received biographical material Institute offices for the 1945-1946 term introducing representatives of the commit­ were sent to the press. Clippings show tee appearing as speakers. that newspapers in Oklahoma City, Bos­ Reprints of an editorial in The Journal ton, Minneapolis, New York, and other of Accountancy on the subject of the Susan Ranney Completes 25 Years cities published the announcement, and Murray Full Employment bill were sent that it was sent to member papers by the to 398 editors of daily newspapers, to This month Susan Ranney completes 25 Associated Press. interested members of Congress, to busi­ years of service with the Institute. She is Editors of newspapers and press asso­ the senior member of the staff, in point of ness publications, and to editors of state ciations received a brief news announce­ service. In the capacity of assistant to the ment of the decision to cancel the 1945 society bulletins and chambers of com­ treasurer, she has supervision of the accounts, annual meeting and to elect 1945-1946 merce publications. A note accompanying financial records, and membership records of the editorial reprint called attention to its the Institute, assists the budget committee in Institute officers by mail vote. Clippings discussion of objections to the “national the preparation of data for its reports, main­ received show this release was distributed production and employment budget” pro­ tains files and answers requests for informa­ by the Associated Press and the United posed in the Murray bill. tion on accountants, and assists with staff Press. A news memorandum based on the edi­ personnel work. F r a n k A. G ale torial was sent to a selected list of financial Miss Ranney came to the Institute imme­ Assistant Secretary. diately following two years with the Amer­ editors, and the following item appeared ican Red Cross in Italy, the Balkans, and in the New York Herald Tribune for Oc­ France. During the latter portion of that OFFICERS AND STAFF tober 3, under “Wall Street Comment”: time she was assistant controller of the Balkan Commission. “Some of the difficulties presented by John L. Carey, secretary, addressed the the Murray Full Employment bill are dis­ annual fall conference of the Wisconsin cussed thoughtfully in the current issue of Society of CPA’s at Madison, September The Journal of Accountancy. Almost 28, on the subject of “General Status of everyone at the hearings indorsed this Carman G. Blough, director of research, Accountancy with Particular Reference to measure in principle, which is quite un­ to address the District of Columbia Insti­ the Problem of Returned Veterans.” He derstandable, since no one cares to be tute October 8 on the subject of “Current also spoke on problems of the profession at the October 9 meeting of the Maryland regarded as favoring unemployment, the Problems in Accounting and Auditing.” publication notes. But the great question Association of CPA’s. An advance news story on Mr. Blough’s is raised whether the bill in its present Thomas W. Leland, educational direc­ form might be interpreted by the people engagement was prepared for the Wash­ tor, spoke before the annual meeting of as promising so much that the promise ington newspapers. the Ohio Society of CPA’s at Cleveland could not possibly be fulfilled. The polit­ Arrangements also were made for David September 27 on “The Educational Pro­ ical and social repercussions from failure B. Chase to address the Philadelphia Chap­ gram of the American Institute of Ac­ to redeem the promise are held to be so ter of the Pennsylvania Institute October countants.” grave as to endanger the economic system 17 on “Warnings and Possible Tax Sav­ George H. Sherwood, business manager to which the bill declares its allegiance. ings in Recent Significant Tax Decisions,” of The Journal of Accountancy, visited The importance of the bill is considered and for Peter Guy Evans to discuss taxes Chicago, Buffalo, and Rochester, Septem­ to be such that it might prove to be the ber 23 - October 2, in the interest of Jour­ at a meeting of the New Hampshire Chap­ keystone of economic policy and a primary nal advertising, and also to discuss with determinant of the course of our political, ter of NACA in December. Advance manufacturers advance plans for the busi­ social and economic life.” news summaries of addresses by the In­ ness show to be held in conjunction with The speaker’s bureau arranged for stitute’s secretary before the Wisconsin the 1946 annual meeting of the Institute. 10 The Certified Public Accountant

COMMITTEE MEETINGS helped to shape the progress of our Insti­ tee on disciplinary procedure. He has tute, making it a more useful tool in the also served on numerous other AIA com­ The executive committee met in New advancement of our profession. mittees through the years. York September 10. Present: Samuel J. “At present, he is a member of the “As a result of such service, he is now Broad, chairman, Parry Barnes, Percival F. all-important committee on refresher well equipped with an understanding of Brundage, J. William Hope, Edward A. courses for members returning from the the national AIA viewpoint and the me­ Kracke, Robert H. Montgomery, Earl A. armed forces. And we say all-important, chanics of the organization. Add to that Waldo, Edward B. Wilcox. Also: T. because we believe much of the stability his very fine knowledge of our professional Dwight Williams, John L. Carey, secre­ and well-being of our profession depends aims and a pleasing personality, and you tary. on veterans being busily and happily en­ have a man eminently fitted for the job of leadership. The Institute’s board of examiners met gaged in their chosen work. “From 1942 to 1945, Mr. Williams was “Oklahomans who have known him a at the office of the Institute September 11. chairman of the committee on state legis­ long time will recall that he started in Present: Henry E. Mendes, chairman, Roy lation. In 1943-44 he served on the com­ accounting in Okmulgee, attaining his Andreae, Harold R. Caffyn, Kenneth M. mittee on nominations, in 1942-43 on the CPA certificate in 1925. In 1930 he moved Montgomery, Raymond E. North, George committee on accounting procedure, and to Oklahoma City, where he now heads E. Perrin, Donald Perry, Edward J. Steg­ from 1939 to 1940, on the special commit- the firm of T. Dwight Williams & Co.” man, Norman E. Webster. Also: T. Dwight Williams, John L. Carey, secre­ tary, and Thomas W. Leland, educational director. The Voice of the Membership The committee on accounting proce­ Release of Accountants from has voiced an attitude which does not dure met at the Union League Club, New Armed Forces suggest early release from service of Insti­ York, September 13 and 14. Present: tute members who are performing ac­ George D. Bailey, chairman, William H. To T h e C e r t i f i e d P u b l i c A c c o u n t a n t : counting duties. Such duties usually are Bell, Henry T. Chamberlain, M. C. Con­ With much personal interest, I have non-military in nature and can be, and ick, James L. Dohr, Harry E. Howell read the letter which appears on page 16 during the war were, effectively performed (first day), Paul K. Knight, George O. of the September bulletin. As an Insti­ by accountants in civilian status. May, Warren W. Nissley, William A. tute member on his fifth year of military Now that the shooting war is over and Paton, Walter L. Schaffer, Harold B. service, I would like to present my own economic adjustment presents itself as the Simpson, Jackson W. Smart, Maurice H, views on the same matter. The presenta­ major factor on the national scene, the Stans, Cyril Talbot, C. Oliver Wellington, tion will necessarily be somewhat subjec­ responsible public officials have rightly John H. Zebley, Jr. Also: T. Dwight tive because since November 1943 I have stressed the importance and urgency of Williams, John L. Carey, secretary, Car­ been assigned to renegotiation duties at the retention and continuation of experi­ man G. Blough, director of research, Paul the operating level. I was inducted as a enced qualified personnel on renegotiation J. Graber, research assistant. private in September 1941. and termination activities. Such empha­ The trustees of the American Institute I recall seeing in a bulletin of about sis indicates that military personnel, espe­ Benevolent Fund, Inc., met in New York a year or so ago a summary of the Insti­ cially the young professional accountants, September 14. Present: John B. Niven, tute members in service which showed will be retained in service for at least president, Charles B. Couchman, C. Oliver that a majority of the members was then three or four months to come, and those Wellington, John L. Carey, secretary. in the enlisted and junior officer grades. connected with renegotiation perhaps far into unless the present renegotiation NOMINEE FOR PRESIDENT Thus, it would seem that any attitude 1946 statute is unexpectedly cut back. PRAISED IN HOME STATE which the Institute might adopt or publish with respect to the separation of its mem­ Objectively, no one can deny that the The following item appeared in the bers from active uniformed service, if that welfare of the national economy demands July 1945 issue of The Oklahoma Certified attitude is to consider the personal wel­ a continued care on the part of govern­ Public Accountant: fare of all the Institute members in service, ment to insure that the 1945 renegotiation “T. Dwight Williams, nominee for the should urge the earliest practicable re­ and termination activities, with their com­ presidency of the American Institute of lease of those members who have served plex accounting and other problems, will Accountants, is a man whom Oklahoma well and long, no matter where, so that be properly conducted by trained, experi­ can proudly advance for that high office. such members could embark on personal enced personnel; nevertheless, to force “First, he is well known throughout the reconversion programs and not be held those in uniform, who have already served state, so that all our own Society mem­ relatively long in service simply because long and efficiently on such duties which bers can give their support to him not they are professional accountants. How­ have not enabled them to amass large only as Oklahoma’s nominee, but as a ever, it seems that the Institute, if one point scores, to wait until nearly the last friend and loyal fellow worker. “But even more important is the fact accepts the letter mentioned above as for release does not seem equitable from that he has attained quite a measure of expressing an attitude in which the Insti­ a subjective viewpoint. Thus, having distinction nationally through his work tute silently concurs since the editor of served over four years in uniform and not on AIA committees. And this work has the bulletin has not indicated otherwise, having used any influence to “finagle” The Certified Public Accountant 11 what some people might think is a soft Professional Requirements for Veterans Independence of Certified Public sinecure of a duty assignment but instead Accountants having unsuccessfully gone out of my way In response to the invitation extended to obtain overseas duty, I am now faced in the August Certified Public Accountant T o T h e C e r t i f i e d P u b l i c A c c o u n t a n t : with an indefinite period of further uni­ to the Institute membership to submit I don’t want to see the rules of the formed service on duties which actually views on professional requirements for game so written as to narrow our place are non-military in nature while others veterans, I would also like to make the in affairs. “Auditor” is not to me synony­ with much less service in the states and following comments: mous with “public accountant.” Public none overseas return to the pick of the I have been in service more than 4 years accountancy is many things besides audit­ civilian positions. now and have been in a position to observe ing. Without question, personnel with long the various duties, accounting and other­ Though auditing absorbs more man- and arduous combat duty should be given wise, to which professional accountants days of the profession than anything else first consideration. and clerks who call themselves account­ it is not necessarily the most constructive In summary, the evaluation of my re­ ants have been assigned in the Army Air thing we do. lease prospects is that, along with other Forces. Their duties have run the scale We don’t want pursuit of the ideal in members of the Institute who are in uni­ from those of menial squadron clerk to our status as auditors so to circumscribe form and who have already given three those of officers and enlisted men perform­ our other work that we become auditors to five years faithful, conscientious uni­ ing duties requiring a complete working only. If such should be necessary another formed service to their country, I appear knowledge of accounting theory and prac­ group will emerge to assume duties we to be “engaged” by the government to do tice, e.g., renegotiation financial analysts, refuse. professional accounting work at much less auditing officers. And, of course, there are It is my view that we should con­ than professional rates until renegotiation many accountants and accounting students fidently enter into any area of current for 1945 has been completed. I am not who have been lost in the huge military affairs where recognition and solution of a partner in a firm. When I read the machine and whose military duties have problems is foundationed on accounts. If many advertisements for staff members never been connected with accounting we do not, who will? Certainly these and government positions now appearing matters. Thus, it is impossible to arrive functions other than auditing will not be in The Journal, bulletin, and elsewhere, at the general conclusion that any and as well served by another group, unless I cannot help beginning to be concerned all Army experience, no matter what type, a segment of our profession breaks off to about my own future and wondering what has qualified an individual to become a foreswear auditing and follow accountancy will be left for those released last. The public accountant or even to sit for the into its other fields. And, even so, no one situation does not create high morale con­ examination. Moreover, it would appear is as well acquainted with the facts, and ducive to efficient professional work. to me that an individual in Army life thus as well qualified to serve in these In conclusion, I feel that any policy, for several years and not assigned to duties other capacities, as the man who has announcement, or publication of the Insti­ requiring an extensive working knowledge gained his familiarity with the situation tute with respect to release of its members of accounting would have difficulty pass­ through auditing it. from active service should expressly take ing the examination until after he had It is extremely probable that no exclu­ into consideration members who have become adjusted to the ways of civilian served relatively long and who desire to sive statement can ever be written regard­ life and reacquainted himself with ac­ ing independence. In cases in the middle be released; and, if the work still has counting theory and practice. Thus, I to be done, the stated attitude should urge ground, independence will always be a would recommend that the experience of matter of conscience. Let us assume, as the replacement of the uniformed account­ each individual veteran be considered and ants by civilians. a responsibility of our position, the duty evaluated separately by a committee hav­ to disqualify ourselves in any situation If necessary, the service man might be ing some veteran members and, if the induced to remain on the job in a civilian where we feel that objectiveness may have experience is found adequate, that the become impaired, and then limit the state­ capacity. veteran be permitted to take the exam­ This letter has not been written to ment of detailed circumstances, regarded ination. criticize W ar Department policy for as as injuring independence, to the mini­ It is my opinion that, under no circum­ a soldier whatever I am ordered to do, I mum. stances, should the examination be waived do. Rather the letter has been written to Let us draw our statements on inde­ for any individual, veteran or otherwise, indicate to the Institute that there is an­ pendence to contain a bold word of warn­ not only in fairness to the individuals other side, the subjective, to the separation ing, to any who may read, that we are who have already qualified through pass­ problem as it concerns each Institute mem­ jealously aware of our rightful place in ing the examination but also to safeguard ber in uniform. The possible effect any the scheme of things and do not intend the high standards of CPA’s maintained announced attitude might have on the in­ to be shouldered out of it by impractical by the examination requirement for ad­ dividual welfare of Institute members in notions regarding our independence as mission to their ranks. service should have prime consideration; auditors. and the Institute should call for, hear, and A r t h u r F. E v a n s M a r q u i s G. E a t o n consider all aspects of the problem. Captain, Air Corps. San Antonio, Texas. 12 The Certified Public Accountant

ACCOUNTANTS NEEDED BY “If it is possible for you to make an ELECTION OF MEMBERS PRICE ADJUSTMENT OFFICE announcement in T h e C e r tifie d P u blic C a l i f o r n i a A c c o u n ta n t suggesting that anyone who Clarence H. Bodo, Los Angeles The following letter has just been re­ is interested communicate with the writer *Jack Alphonse Cozy, Los Angeles ceived from Major Leonard Price, of The at the above address, it will be greatly *Crawford J. Porterfield, Sacramento Quartermaster General’s New York Price appreciated.” C o l o r a d o Adjustment District Office (111 E. 16th Harlan H. Holben, Denver St., New York 3, N. Y.): ACCOUNTANTS NEEDED IN D e l a w a r e * Earl C . James, Wilmington “This office has a number of openings UNRRA *Desmond A. Lyons, Edge Moor for qualified accountants. The work in­ District of Columbia volves the analysis of financial data sub­ UNRRA is in urgent need of qualified * Edward T. Cook, Washington mitted by contractors in connection with accountants both for service in Headquar­ F l o r i d a renegotiation. The positions are civil ser­ ters, Washington, D. C., and also overseas †David Stuzin, Miami vice appointments, the ratings ranging in the Far East or Europe, according to Morris W. Weinberg, Miami from CAF 10 upwards, depending upon information recently received from the I l l i n o i s qualifications. An accounting background director of accounts and audits of the Edgar R. Bourke, Chicago Benjamin L. Cooper, Chicago is required and some public accounting Administration. Applicants are required experience is desirable, but not essential. *William Elden, Chicago to have had public accounting or com­ John N. Horwath, Chicago The Renegotiation Act expires 31 Decem­ †Clayton B. McCallen, Chicago ber 1945, but it is anticipated that the re­ mercial accounting experience. Applica­ tions should be sent to the Personnel Divi­ William B. Petty, Decatur view of 1945 calendar and fiscal year op­ †Marvin J. Robinson, Chicago erations will be of considerable duration sion, 1344 Connecticut Avenue, Washing­ John A. Schur, Chicago thereafter. ton, D. C. †William A. Wulf, Chicago

What the Members Are Doing Atomic Bomb become assistant secretary of the Associa­ Chamber of Commerce tion. Mr. Carter is the first national officer Lt. John L. Titus, AUS, of Hawthorne, Charles F. Coates of Hartford, Conn., of the Association from the “deep south.” N. J., has been associated with the Intel­ has been elected president of the Hartford He is president of the Georgia Society of ligence and Security Division of the Man­ Chamber of Commerce for the year begin­ CPA’s and past president of the Atlanta hattan Engineering District, Army Ser­ ning July 1, 1945. In announcing his elec­ Chapter of the NACA. He served as a vice Forces, in the completion and use of tion, the Chamber observed that Mr. Coates member of the Association’s national the atomic bomb. The Manhattan District is the first member of the accountancy pro­ board from 1940 to 1942. was awarded the Meritorious Service Unit fession to serve as its president. Plaque for its contribution to the national Honor Award Guest Professor of Cost Accounting effort on the atomic bomb. Hiram T. Scovill, Acting Dean of the George N. Farrand, former research as­ Heads Controllers Institute University of Illinois College of Com­ sistant of the Institute, now with the Office Edwin E. McConnell, controller of the merce and Business Administration, was of Contract Settlement in Washington, Norton Company, Worcester, Mass., has the honor award guest and speaker at the D. C., has been appointed professor of been elected president of the Controllers Annual Honor Award Dinner of Beta cost accounting at Columbus University Institute of America. Gamma Sigma Alumni in New York on School of Accountancy, Washington. The September 24. Professor Scovill is one of classes, designed to meet the needs of re­ Retires from Denver University the founders of Beta Gamma Sigma, and turning veterans, will be conducted in the Clem W. Collins of Denver, Colo., past was instrumental in securing its national evening. president of the Institute, has retired as recognition as the honorary society for the Promotion Dean of the University of Denver School collegiate schools of business. His subject of Commerce. Mr. Collins will maintain was “Government and Business.” Lyman W. Oehring of Saginaw, Mich., his connection with the School of Com­ has been promoted to the post of operat­ Appointed to State Agricultural Board merce, however, as chairman of its execu­ ing vice-president of the Lufkin Rule Co. tive committee. Governor Thomas L. Bailey has ap­ Mr. Oehring has been controller of the pointed J. Donovan Ready of Meridian as Company since 1939. Vice-President of NACA a member of the Mississippi Agricultural Partnership William J. Carter of Atlanta, Ga., has and Industrial Board, to succeed George been elected vice-president of the National Pecaro, resigned. The Board will handle Frederick A. Schutte and Robert I. Wil­ Association of Cost Accountants, to fill the state’s program to balance agriculture liams announce the formation of the firm the vacancy created by the resignation as with industry. Mr. Ready is vice-president of Schutte & Williams, with offices at 11 vice-president of Arthur B. Gunnarson to of the Mississippi Society of CPA’s. Broadway, New York. The Certified Public Accountant 13

I n d ia n a †James A. DeWald, Fort Wayne Applicants Recommended for

K a n s a s †J. T. Koelling, Wichita Admission Ben F. Kubik, Wichita *J. B. Larson, Wichita The board of examiners has given con­ M is s o u r i sideration to applicants for admission to the James R. Fleet, Kansas City L o u is ia n a American Institute of Accountants and rec­ *Seymour J. Harris, New Orleans M o n t a n a ommends the election of fourteen applicants William B. Finlay, Jr., Great Falls for admission as members and eleven ap­ M i c h ig a n plicants for admission as associates who have New Hampshire William J. Predhomme, Detroit been accorded credit for having passed ex­ Nathaniel F. Bigelow, Jr., Manchester Arthur D. Schoonover, Saginaw aminations acceptable to the board of exam­ N e w J e r s e y *William C. Schultz, Detroit iners. Thirteen applicants for admission as Herman Moskowitz, Passaic members and twenty-eight applicants for ad­ N e w Y o r k M is s o u r i mission as associates have passed the Insti­ Harry Miller, St. Louis *William J. Frank, Rochester tute’s examination for a CPA certificate in *Arthur Korotkin, Albany N e b r a s k a cooperating states. The board recommends Joseph O. Osgood, New York *Herbert W. Probasco, Lincoln one associate for advancement to member­ Edward C. Parker, New York ship. N e w J e r s e y *Bernard Rubin, New York A l a b a m a *Arthur J. Ryan, New York Walter Solberg, Westwood *Meriwether L. Smith, Wilson Dam Harold E. Stagg, New York N e w Y o r k A r k a n s a s Roy Tarlow, New York Leon M. Chaikin, New York *Knox McLerkin, El Dorado Stanley B. Tunick, New York *Edward K. Duplessis, New York *Edward B. Sparks, Jr., Fort Smith O h io *Jerry G. Kimbrough, Cincinnati *Melvin Goldman, Mamaroneck C a l i f o r n i a *George D. Kneip, Cleveland †James A. Hanley, New York Maurice J. Creamer, Los Angeles *Clifton L. Lux, Cleveland *Herbert Z. Kadison, New York *Bernhard U. Krummel, San Francisco Maurice Melincoff, Cleveland David I. Katzenelson, New York *Jack M. Ostrow, Los Angeles Hyman D. Klein, New York Richard C. Rea, New Philadelphia George B. Leonard, New York C o l o r a d o Calvin B. Wetmore, Canton Joseph A. Loewenstein, New York William A. McDonald, Denver O k l a h o m a Morris Manoff, New York Connecticut *John H. Klein, Tulsa *Edward D. Mazzarella, New York *Allerton C . Hickmott, Hartford *George Sherman, Gloversville O r e g o n Joseph Y. Smith, Bridgeport John A. Givens, Portland Joseph S. Swimmer, New York F l o r id a Delbert O. Kimberling, Portland †Edward D. Wanty, New York Sidney Wasserman, Miami Beach Pennsylvania O h io District of Columbia Joseph Ellenbogen, Pittsburgh Joseph G. Baden, Cleveland *B. Winfred Ruffner, Washington *Samuel J. Elias, Philadelphia Edward M. Kovachy, Cleveland *Lyndon L. Scates, Washington Robert F. Hauserman, Erie Lawrence H. Hufnagel, Pittsburgh *Kenneth E. Lambert, Dayton I d a h o Donald V. Marti, Toledo *Waldo A. Thurber, Boise South Carolina Sidney Stromberg, Cleveland Ernest R. Daniell, Charleston Alvin Clarence Vinopal, Akron I l l in o i s *William J. Ready, Columbia Ivan R. Zaebst, Cleveland S. Alexander Bell, Chicago *Robert J. Carlson, Chicago T e n n e s s e e O r e g o n *Maxwell O. Ehlert, Springfield *John W. Campbell, Nashville *Carl A. Fischer, Jr., Chattanooga *George R. Blodgett, Portland William Adam Fuller, Rockford *Harold Faunt, Portland Arthur J. Hamer, Chicago T e x a s *Lester H. Peterson, Chicago *Howard L. Warren, Jr., Houston Pennsylvania *F. H. Ziebell, Jr., Chicago *Lawrence L. Purjet, Galveston Edward H. Beck, Philadelphia I n d ia n a *Lavon E. Lovinggood, Dallas †William D. McCluskey, Philadelphia *James Dincolo, Notre Dame U t a h T e n n e s s e e *Alma Merkert, Marion *Fred M. Oliver, Salt Lake City

†Dixie Lanier Lewis, Jr., Chattanooga K a n s a s W a s h i n g t o n Leo J. Brinkman, Emporia *Paul S. Ford, Seattle T e x a s *James W. Palmer, Seattle *Arthur L. Brown, Houston K e n t u c k y *Ralph U. Maddox, Dallas *John W. Koernner, Louisville W i s c o n s in John F. Y. Stambaugh, Houston *John A . Reisz, Louisville *Eldred G. Koepke, Milwaukee These applicants do not become members L o u is ia n a U t a h or associates until voted upon by council *Victor Lota, New Orleans *Lawrence S. Pinnock, Salt Lake City and declared elected by the president. If pro­ †Junius H. Payne, Jr., Alexandria W is c o n s in test is to be made against any applicant on *Alfred V. Hill, Marshfield M assachusetts the list it should reach the office of the In­ *David Saewert, Milwaukee A. Allen Aaron, Springfield stitute on or before October 3 1, 1945. John J. Fitzgerald, Boston *Admitted as associates. M i c h ig a n * Indicates associateship. †Advanced to membership. *Norman G. Currin, Detroit † Indicates advancement to membership. 14 The Certified Public Accountant

ACCOUNTING IN WAGE fessional accountants as normal procedure bership, others very substantial gains. An NEGOTIATIONS can be contemplated. After all, the level analysis of the membership statistics of of wages does not rise and fall in close other state societies would be of general Under authority of the executive com­ conformity with the profit trends of indi­ interest. mittee, the president of the Institute on vidual companies. If it did, I fear that September 19 sent the following telegram labor would be very unhappy over the The Minnesota Society cooperated with to William Green, American Federation results.” the Hennepin County Bar Association dur­ of Labor; Eric A. Johnston, United ing the past year in the publication of a INSTITUTE ON FEDERAL States Chamber of Commerce; Ira Mosher, daily column of questions and answers on National Association of Manufacturers; TAXATION income-tax matters which appeared in the Philip Murray, Committee for Industrial The Division of General Education of Minneapolis Morning Tribune. Organization; and Lewis B. Schwellen­ New York University has announced its The Texas Society’s committee on coop­ bach, U. S. Department of Labor: fourth annual Institute on Federal Taxa­ eration with attorneys has had two meet­ tion, to be held November 7-20. Materials ings with the Texas Bar Association for “Much of the current and imminent to be covered in the 1945 session, at controversy between labor and manage­ the purpose of working out a joint state­ morning and afternoon meetings, have ment is rooted in differences of opinion as ment on the relations of lawyers and to costs and profits. It is perhaps natural been grouped roughly as follows: accountants which is expected to be simi­ that unions hesitate to accept management’s Estate planning, gift and estate tax prob­ lar to the statement published by the Mil­ statements, and management hesitates to lems, November 7 and 8 waukee Chapter of the Wisconsin Society accept statements of unions’ statisticians. of Certified Public Accountants and the Practice, procedure, and similar problems, A primary function of the accounting Milwaukee Bar Association (reproduced profession is to provide independent finan­ November 9, 10 and 11 in T h e C er tifie d P u b lic A c c o u n t a n t for cial statements on such matters, which Income tax subjects, November 12 through July, 1945). may be relied upon as the statements of 16 disinterested experts by parties with di­ New York State Society on September Excess-profits-tax subjects, November 16 verse interests. Instances have come to our 19 held the first of a series of 15 weekly through 20. attention in which unions and manage­ lecture and forum sessions on federal taxa­ ment have agreed in advance to accept as A detailed program may be obtained tion. a basis for negotiation financial data re­ upon request from Paul A. McGhee, Di­ ported by independent certified public The Michigan Association’s on-the-job rector, Division of General Education, accountants selected by mutual consent. training program and problems relating to New York University, 100 Washington Representatives of the American Institute the employment, training, and education Square East, New York 3, N. Y. of Accountants would be glad to discuss of returning veterans were discussed at with you the possibility of extension of the first postwar meeting of the Associa­ this procedure if you believe it would be STATE SOCIETIES helpful in minimizing wage disputes and tion on September 13. The Institute has sent to the presidents avoiding delay in reconversion.” Recently Appointed State Society of all state societies a report of a special Officers At the time this bulletin goes to press, committee of the Connecticut Society de­ N e w Y o r k acknowledgments have been confined to fining the aims and purposes of its various brief statements that the matter would President—William R. Donaldson, New York committees. Several state societies, includ­ First vice-president—Prior Sinclair, New have consideration, except in the cases of ing those of New York and Texas, have York Mr. Green and Mr. Johnston, who added drawn up outlines which are found to be Vice-presidents—P. F. Brundage, New York the following comments, respectively: very helpful in organizing the activities of Simon Loeb, New York Henry E. Mendes, New York Mr. Green: “Be assured that I appre­ a newly appointed committee and in Charles H. Towns, New York ciate fully the value of detailed financial measuring its accomplishments during the Secretary—Franklin C. Ellis, New York statements regarding cost, profit and the year. Treasurer—H. E. Van Benschoten, New York capital structure of corporations when em­ The Ohio Society reports a present mem­ N o r t h C a r o l in a ployers and employees participate in col­ bership of 638, more than half the num­ D. E. Gatewood, Jr., of Winston-Salem, lective bargaining. It has been a fixed pol­ executive vice-president, automatically be­ icy of the American Federation of Labor ber of Ohio certificate holders believed to be living—1,150. Forty-three new applica­ came president when the board of directors to secure facts and information regarding accepted the resignation of Charles S. Lowri­ the earnings, profits and capital structure tions for admission to membership in the more of Wilmington, on August 4th. The of corporations for the use of our unions Society were received in the current year. Board appointed Allen E. Strand of Greens­ when engaged in wage negotiations with An analysis of present certificate holders boro executive vice-president. employers.” revealed the following information: In T e x a s Mr. Johnston: “I am well aware of the public practice, 801; in positions in indus­ President—Laurence H. Fleck, Dallas valuable service rendered by some mem­ try, 248; in military service, 74; unknown, First vice-president—R. L. Pope, San Antonio bers of the profession on assignments of 27. The experience of state societies during Second vice-president—John B. Allred, Wich­ the kind that you have in mind. How­ ita Falls ever, I doubt whether we have reached the war years seems to vary widely. Some Acting secretary-treasurer—Nelson D. Durst, the point where the utilization of pro­ societies report very slight gains in mem­ College Station The Certified Public Accountant 15

Ferron L. Andrus Accountants. Mr. Bruneau was runner-up He was a member of the committee on Ferron L. Andrus, vice-president and in the National Veterans’ Championship, stock brokerage accounting 1938-1939 and controller of Forest Lawn Memorial Park and a well-known tennis player here and chairman 1939-1940; he also served on the Association of Glendale, Calif., died June in the South. He was a member of committees on technical information, stu­ 19, the Institute has just learned. He be­ the Heights Casino Tennis Club in Brook­ dents’ societies, and meetings. He was a came associated with Forest Lawn eight lyn and the West Side Tennis Club member of the Ridgewood Country Club. years ago. He was 45 years old, and a in Forest Hills, Long Island. One of native of North Dakota. Mr. Andrus was his sons, Armand L., Jr., now with the Elmer W. Ross educated at the University of North Army of the United States, is also a mem­ Elmer W. Ross of Kansas City, Mo., died Dakota and the University of California ber of the Institute. August 18 as a result of an accident which at Los Angeles, and held the CPA certif­ occurred when he suddenly swerved his icates of California and Washington. From Daniel A. Horn car to avoid striking a child. Mr. Ross was 1919 to 1924 he was accountant with the Daniel A. Horn, 54, a partner of F. W. manager of the Kansas City office of Fox, Los Angeles Times, and later was pur­ Lafrentz & Co., Atlanta, Ga., died July 30. Morgan & Rossdutcher. Born in Roches­ chasing agent in Florida for the American- He had been associated with the firm for ter, N. Y., in 1896, he became a CPA of British Improvement Co. Mr. Andrus was ten years. A native of Georgia, Mr. Horn Missouri in 1931 and a member of the In­ a Mason and a member of the Sigma Pi was graduated from the University of that stitute in 1933. Mr. Ross was awarded Fraternity. He was a member of the state in the class of 1911. During World the Order of the Purple Heart in World Controllers Institute of America, and had War I he served as a second lieutenant War I. Early in World War II he was been a member of the American Institute with the “Rock of the Marne” Division commissioned a lieutenant commander in of Accountants since 1931. and was later assigned to the Army of Oc­ the Naval Reserve and served for a time cupation in Coblenz and Ehrenbreitstein. as a naval inspector. Louis Bergman After the war he taught accounting at Louis Bergman of New York, N. Y., Akron University and was an accountant Noel R. Simpson died January 10, the Institute learned re­ with Goodyear Tire and Rubber Com­ Noel R. Simpson, partner in charge of cently. Mr. Bergman was a field conferee pany in Akron, Ohio. He was credit man­ the San Francisco office of Arthur Ander­ in the Bureau of Internal Revenue in New ager of Goodyear’s branch office in Paris, sen & Co., died suddenly at his home in York, and had been associated with the France, for two years and was credit man­ San Mateo, Calif., August 10. Mr. Simpson U. S. Treasury Department since 1920. ager of their Miami office. Mr. Horn re­ had been associated with his firm since He became a CPA of Ohio in 1926 and an ceived his CPA certificate in Georgia in 1922. He was born in Wisconsin in 1899 associate of the Institute in 1927. 1939 and became a member of the Insti­ and received the BA degree from the Uni­ tute early this year. Russell E. Briggs versity of Wisconsin in 1922, transferring to the West Coast in 1929. He held the Russell E. Briggs of New York, N. Y., John V. McDonald CPA certificate of nine states, including a member of the Institute for 25 years, John V. McDonald of Spokane, Wash., the states of Wisconsin and California, died March 7, the Institute has just been died recently, the Institute has been in­ and had been a member of the Institute informed. Mr. Briggs was an internal formed. He was practicing accounting since 1933. He was a member of the revenue agent for the U. S. Treasury De­ under his own name in Spokane. Mr. Mc­ Lambda Chi Fraternity and of the Masons. partment. He received CPA certificate No. Donald received CPA certificate No. 89 in 84 from the State of Massachusetts in 1911 the State of Washington in 1919, and be­ and became a CPA of New York in 1921. Earl E. Thomas came a member of the Institute in 1934. Earl E. Thomas of Evansville, Ind., Armand L. Bruneau member of the Institute for 20 years, died Robert H. Prytherch Armand L. Bruneau of New York, August 22 at the age of 63. He was a part­ N. Y., member of the American Institute Robert H. Prytherch, 49, of Ridgewood, ner of Thomas, Bootz, and Thomas, and of Accountants and predecessor organiza­ N. J., died September 26 at the Lenox had been associated with the firm since tions since 1911, died August 20 at the Hill Hospital, New York City. He was a 1921. A native of New Madison, Ohio, age of 59. A native of New Haven, Conn., native of Binghamton, N. Y., and held the Mr. Thomas became a CPA of Indiana he had practiced accounting under his BCS degree from New York University. in 1922 and joined the Indiana Associa­ own name in New York for many years. Mr. Prytherch joined the firm of Leslie, tion of CPA’s in 1924, and until the time In 1912 Mr. Bruneau became the 515th Banks & Co., New York, in 1917 and in of his death continued to be active in pro­ CPA in the State of New York, having 1925 was made a partner in the firm. He fessional affairs in Indiana. He was vice- passed the examinations “with honor.” He received the CPA certificate of Illinois in president of the Association in 1930 and served on a number of committees of the 1923 and of New York in 1937, and was 1931 and president in 1932. From 1941 to New York State Society of CPA’s and a member of the New York State Society 1945 he was a member of the State Board from 1942 to 1945 was chairman of the of CPA’s. Mr. Prytherch became a mem­ of Certified Accountants of Indiana. He fiduciary committee. He was also a mem­ ber of the Institute in 1933, and was active also served on the Institute’s committee on ber of the National Association of Cost in committee work for a number of years. membership, 1937-1939 and 1943-1945. ANALYSIS OF MEMBERSHIP IN PROFESSIONAL SOCIETIES OF CERTIFIED PUBLIC ACCOUNTANTS Compiled by the stuff of the American Institute of Accountants from information in the records August 31, 1945

PER CENT MEMBERS AND PER CENT OF TOTAL STATE OF TOTAL TOTAL NO. ASSOCIATES TOTAL IN SOCIETY IN STATE STATES C. P. A.’s OF A. I. A. A. I. A. MEMBERSHIP SOCIETIES Alabama 92 45 48.9 34 37.0 Arizona 80 33 41.3 54 68.0 Arkansas 86 45 52.3 41 47.7 California 1464 626 42.9 761 52.0 Colorado 166 59 35.5 131 79.0 Connecticut 280 135 48.2 203 72.5 Delaware 52 30 57.7 16 30.8 District of Columbia 516 253 49.0 176 34.1 Florida 225 107 47.6 95 42.2 Georgia 333 114 34.2 186 55.9 Idaho 34 14 41.1 41 20.6 Illinois 2158 799 37.0 1001 46.4 Indiana 354 154 43.5 277 78.2 Iowa 126 52 41.3 40 31.7 Kansas 118 59 50.0 99 83.9 Kentucky 152 107 71.1 127 83.6 Louisiana 351 166 47.3 207 59.0 Maine 50 13 26.0 11 22.0 Maryland 598 133 22.2 344 57.5 Massachusetts 884 378 42.8 398 45.0 Michigan 813 327 40.4 475 58.5 Minnesota 224 107 47.8 153 68.3 Mississippi 103 43 41.7 66 64.1 Missouri 481 257 53.4 284 59.0 Montana 74 30 40.5 54 73.0 Nebraska 78 33 42.3 49 62.8 Nevada 7 3 42.9 Note 1 New Hampshire 28 15 53.6 51 54.9 New Jersey 1043 269 25.8 499 47.8 New Mexico 21 13 61.9 42 20.0 New York 9081 1948 21.5 4894 53.8 North Carolina 255 92 36.0 155 60.8 North Dakota 22 9 40.9 Note 2 Ohio 921 407 44.2 618 67.1 Oklahoma 231 122 52.8 163 70.6 Oregon 207 80 38.6 150 72.5 Pennsylvania 1448 650 44.9 973 67.2 Rhode Island 83 45 54.2 17 20.5 South Carolina 69 31 44.9 44 63.8 South Dakota 18 9 50.0 10 55.6 Tennessee 283 128 45.2 134 47.3 Texas 744 362 48.7 504 67.7 Utah 91 50 54.9 71 78.0 Vermont 19 6 31.6 12 63.2 Virginia 296 126 42.6 126 42.6 Washington 452 189 42.0 228 50.4 West Virginia 66 39 59.1 40 60.6 Wisconsin 671 182 27.1 373 55.6 Wyoming 33 12 36.4 19 57.6

25971 8906 34.3 14447 55.6 U. S. Possessions 134 49 36.6 Foreign 75 25 33.3

26180 8980 34.2 Members of Institute not Certified Public Accountants— 71. Certified Public Accountants are shown in the state in which they reside, but not necessarily a holder of a certificate issued by that state.- Certified Public Accountants whose mail has been returned are included in the above tabulation at the last known address Note 1— N o state society. Note 2— Inactive (latest list dated 1937). THE CERTIFIED PUBLIC ACCOUNTANT A Bulletin of The American Institute of Accountants

N o v e m b e r 1945 13 East 41st Street, N ew York 17, N. Y.

New Officers Council Meeting Officers of the Institute elected for the cur­ rent fiscal year are as follows: WO days of hard work constituted Association of Certified Public Accountant the 1945 fall meeting of council, held Examiners. President—T. Dwight Williams, Oklahoma T at Chicago October 22-23, which this year Reports were received from the presi­ Vice-presidents— had to take the place of the usual annual dent, secretary, executive committee, board Homer N . Sweet, Massachusetts meeting. Presidents of state societies of of examiners, and the great majority of Earl A. Waldo, Minnesota certified public accountants were in at­ the regular committees. Some of the prin­ tendance, as well as the chairmen of In­ cipal questions considered by the council Treasurer—Maurice E. Peloubet, N ew York stitute committees and officers of the are dealt with elsewhere in this bulletin, Secretary—John L. Carey, New York American Accounting Association and the and others will be discussed in coming issues. A report of the council covering The Institute's President generally the Institute’s work of the past year will be mailed to the members and T. Dwight Williams of Oklahoma City, associates in the near future. The full Okla., is the head of the accounting firm of text of all committee reports will be pub­ T. Dwight Williams & Co. A member of lished in the 1944-1945 Yearbook. the Institute since 1926, Mr. Williams has Tellers appointed by the president re­ served as vice president and as a member of council and of the executive committee. Last ported their count of the ballots on which year he was chairman of the committee members had recorded their votes for on state legislation and a member of the officers, members of council, and members committee on refresher course. He has of the nominating committee for the cur­ previously served on the committees on rent fiscal year, and the council confirmed accounting procedure, professional ethics, the selections of the membership, as evi­ nominations, disciplinary procedure, and de­ denced by the mail ballot, under the pro­ velopment of the Institute. Mr. Williams has been engaged in the practice of public ac­ visions of Article VII, section 4, of the counting since 19 19. A certified public by-laws. The election results are indi­ accountant of Oklahoma and Texas, and a cated elsewhere in this bulletin. member of the Oklahoma Bar, for the past Two important resolutions adopted by two years he has been vice president of the the council are reproduced in this issue. Association of Certified Public Accountant Separate meetings of the Advisory Examiners. He is chairman of the Oklahoma State Board of Accountancy and a past presi­ Council of State Society Presidents and dent of the Oklahoma Society of Certified the Association of Certified Public Ac­ Public Accountants. T . Dwight Williams countant Examiners were held, the results 2 The Certified Public Accountant of which will be reported in due course. Accounting Bill providing for free countant’s certificate be produced for Meetings of the executive committee passage of qualified accountants the information of bankers. Referred preceded and followed the council across state and international boun­ to the executive committee. daries. Approved. meeting. In addition, the council received, and Question raised by the board of examiners 1946 Meeting Place as to whether provisions of by-laws in some cases discussed, highly interest­ ing and informative reports from a num­ It was reported that an invitation had governing admission to the Institute been received from the New York State which require accounting experience ber of committees which did not call for Society of CPA’s to hold the 1946 annual or its equivalent should be interpreted formal action. Among them were account­ strictly or liberally. Sense of the coun­ meeting of the Institute in New York, in ing procedure, auditing procedure, federal cil that interpretation should be liberal. conjunction with the New York State taxation, selection of personnel, National Question whether standard of the exam­ Society’s celebration of the 50th anniver­ Conference of Lawyers and CPA’s, gov­ inations for the CPA certificate should ernmental accounting, annual awards, sary of the enactment of the first CPA be lowered. Council said emphati­ accountants’ liability and liability insur­ law in the United States. It was reported cally, “No.” ance, accounting under state highway that preliminary investigation indicated Question of relations between societies of some doubt whether New York hotels certified public accountants and non­ construction contracts, cooperatives, mem­ would be able to offer assurance that they certified public accountants, particu­ bership, natural business year, publication, could accommodate the large numbers of larly those registered under regulatory public information, public utility account­ members who would undoubtedly attend laws, it being noted that some state ing, refresher course, savings and loan societies admit non-certified account­ such a meeting if it were held in the fall accounts, and termination and renegotia­ ants to one class of membership or tion of war contracts. J. L. C. of 1946. The council was also reminded another. Sense of the council that that the Florida Institute of Accountants developments be watched closely, but had been encouraged to believe that Miami that no recommendation be made at would be selected as the place for the present. COUNCIL AND COMMITTEE first meeting after the war. The council Proposed plan of coordination of activ­ MEMBERS resolved that the invitation of the New ities of state and national organiza­ York State Society be accepted if suitable tions, drafted by committee of the Members of council elected for terms be­ accommodations could be assured for a Advisory Council of State Society ginning this year are as follows: meeting in New York in the fall of 1946; Presidents. Approved. Proposed rule of conduct rigorously For a three-year term: that the executive committee be author­ restricting listings in directories. Parry Barnes, Missouri ized to make the final decision as to the Referred to committee on professional George O. Carlson, California 1946 meeting place in the light of devel­ ethics for further study. Charlton N. Carter, Indiana opments in the next few months; and Proposed amendments to social security Samuel W. Eskew, Kentucky that Miami, Florida, be indicated as the act. Sense of council that Institute J. Homer Hardy, Tennessee meeting place for 1947. expressions on matters of public policy should be confined to matters related J. William Hope, Connecticut High Lights of Action Taken to accounting. Lincoln G. Kelly, Utah Among the subjects which the council Recommendation of committee on educa­ Saul Levy, New York discussed at the meeting and those on tion that the Institute sponsor a pro­ William H. Moberly, Kansas which action was taken, in addition to the gram of discussion groups for public R. C. Mounsey, Washington matters dealt with elsewhere in this accountants, based on the refresher Lewis Lilly, California course, Contemporary Accounting. bulletin, were the following: George E. Perrin, North Carolina Approved. Donald M. Russell, Michigan Question of additional sources of financ­ Question whether Institute should take Edward J. Stegman, Maryland ing for the Institute as expenses out­ steps to secure preferential status for Cyril Talbot, Illinois run revenues from present sources. accountants in the armed services in Raymond D. Willard, Massachusetts Referred to executive committee with the matter of discharges. Doubts ex­ request for report and suggestion pressed as to advisability of this pro­ For a one-year term: posal. Matter referred to executive that members be circularized to obtain Laurence O. Manley, District of an expression of sentiment. committee. Columbia Proposal to enlarge the membership of Recommendation of committee on bank­ the council by the addition of all state ruptcy that Institute support referees Principal committees elected for the society presidents who are members bill (H R 3338) which would change current year are as follows: of the Institute during their term of the administration of the referees office, and also the addition of nine courts so that they would become an Committee on nominations: integral part of the federal judiciary. members at large. Approved. Samuel J. Broad, New York Proposal that the council recommend to Approved. J. Leonard Penny, Illinois state societies that there be included Recommendation of committee on cooper­ in future regulatory legislation pro­ ation with bankers and other credit Tom C. Hansen, Missouri visions similar to section 4 of the grantors that a public information Charles W. Hatter, Maryland Institute’s Form of Regulatory Public pamphlet on the meaning of the ac­ Joel D. Harvey, Massachusetts The Certified Public Accountant 3 J. Robert McCoy, California The Vice-Presidents C. F. Milledge, Texas

Executive committee: T. Dwight Williams, chairman, Okla­ homa Homer N. Sweet, Massachusetts Earl A. Waldo, Minnesota Maurice E. Peloubet, New York Parry Barnes, Missouri Samuel J. Broad, New York Percival F. Brundage, New York J. William Hope, Connecticut Edward A. Kracke, New York Jackson W. Smart, Illinois J. Harold Stewart, Massachusetts

Committee on professional ethics: Donald M. Russell, chairman, Michi­ gan John N. Aitken, Jr., Pennsylvania Frederick H. Hurdman, New York Lewis Lilly, California C. Oliver Wellington, New York Homer N. Sweet Earl A. Waldo Members of board of examiners Homer N. Sweet of Boston, Mass, is a Earl A. Waldo, a partner of Boulay, Ander­ for a term of three years: partner of Lybrand, Ross Bros. & Mont­ son, Waldo & Co., Minneapolis, Minn., be­ gomery. He is a graduate and a trustee of Frank Ahlforth, Illinois came a member of the Institute in 1928, and Brown University. A member of the Ameri­ has been a member of the Institute’s council Kenneth M. Montgomery, New York can Institute of Accountants and predecessor since 1937. He has also served on the exec­ Charles H. Towns, New York organizations since 1915, Mr. Sweet has been utive committee, on the committees on nom­ a member of council for the past three years. inations and development of the profession, Committees appointed by the president He has served as chairman of the committees and on the board of trustees of the American with the advice of the executive commit­ on professional ethics, cooperation with SEC, Institute of Accountants Foundation. Mr. meetings, and federal corporation law, and tee will be announced in the near future. Waldo attended the University of Minnesota of the advisory committee on investment School of Business, majoring in accounting, company accounting. In addition, he has been finance, and banking, and entered the practice a member of the committees on cooperation of public accounting in 1921. He is a certi­ STATE ACCOUNTANCY with bankers, federal legislation, and the Na­ fied public accountant of Minnesota, and tional Conference of Lawyers and CPA’s. He was president of the Minnesota Society of LEGISLATION is a certified public accountant of Massachu­ Certified Public Accountants during the setts, Michigan, New York, and Pennsyl­ The committee on state legislation, in period 1935-1937. Mr. Waldo was president vania, and a past president of the Massachu­ of the Kiwanis Club of Minneapolis during its report to the council, appraised the setts Society of Certified Public Accountants. the year 1940. present position of the certified public accountant, reviewed legislative trends affecting the requirements for the CPA The committee reported recent efforts to ing Bill issued by the Institute’s committee certificate, raised several questions of reopen the waiver clause and introduction on state legislation, and described the basic policy for consideration of the council, of bills providing for continuous regis­ points of legislative policy embodied in and recommended a program of legisla­ tration of public accountants, as examples this form of bill. tive activity for the future. of a tendency to lower the standards, and The committee suggested that this type In general, the committee expressed the pointed out that members of state legisla­ of legislation would be satisfactory to view that the CPA certificate was not yet tures who are not well informed as to the many non-certified public accountants now generally accepted by the public as are public interest in maintenance of high in practice who might otherwise support the professional qualifications of the older standards for the CPA certificate, are a more radical legislative program. professions. However, the certificate has sometimes persuaded to support such Reference was made to the existence come to have so much value in business efforts. of organizations of non-certified public and financial circles that there are fairly The committee briefly analyzed the his­ accountants in a number of states, and frequent efforts to amend accountancy tory of regulatory accounting legislation, announcements that a national organiza­ laws so as to make the certificate avail* which has now been adopted by sixteen tion of public accountants was in process able to those who cannot, or do not choose states, analyzed the principal provisions of of formation. It was pointed out that to, acquire it through regular channels. the Form of Regulatory Public Account­ such an organization might give impetus 4 The Certified Public Accountant

to proposals for state legislation recog­ nizing non-certified public accountants. Accounting Education The committee recommended an aggres­ sive legislative program, to be carried out Institute Endorses Amendments to the forces should be able to secure books for by the Institute and state societies in co­ Servicemen’s Readjustment Act of 1944 home study without enrolling in corre­ operation, designed to demonstrate the pub­ Recently the American Institute of Ac­ spondence courses or resident refresher lic interest in maintenance of high stand­ countants and the Practising Law Institute courses. To prevent abuse of the proposed ards for the CPA certificate; to keep state expressed approval of amendments to the provision, it was suggested that approval legislators fully informed of the nature Servicemen’s Readjustment Act of 1944, of books for home study should be dis­ of the certified public accountant’s work designed to correct specific, concrete diffi­ cretionary with the administrator and that and the background of the CPA certif­ culties which have arisen under the pres­ the provision apply only to books made icate; and to marshal in advance all facts ent law as interpreted by the Veterans available by an approved institution which and arguments which might be useful in Administration. There are four difficul­ is either supported by public funds or a legislative controversy over proposed ties, the correction of which was urged. exempt from taxation under Section 101 amendments to a CPA law. First, there is the arbitrary limitation on of the Internal Revenue Code. It was In its discussion of the report, the tuition for short, intensive post-graduate further recommended that such institution council definitely recorded its opinion that or training courses of less than thirty be required to certify that the books are the standards for the CPA certificate weeks’ duration. Under the present law, suitable for home study by the particular should not be lowered, in any circum­ as interpreted by the Veterans Adminis­ applicant who desires to purchase them stances. The following resolution was tration, the over-all limitation of $500 on and that the administrator of the Vet­ adopted: a tuition for an ordinary school year has erans Administration shall find the cost been translated into an arbitrary weekly of the books to be reasonable and fair. “W h er ea s, The American Institute of limitation which, as applied to most in­ The refresher course, Contemporary Ac­ Accountants is firmly of the opinion that stitutions, works out at the rate of $14.70. counting, published by the American In­ standards of education, experience and ex­ This limitation makes it impossible to stitute of Accountants, would seem to be amination are essential for judging quali­ a good example of the kind of material fications to practice public accounting, and provide for adequate, short, intensive re­ fresher courses in many cases. An amend­ which would be made available for home “W h er ea s, The purpose of the stand­ ment to correct the difficulty has been study if the amendment is adopted. ards in state accountancy acts is to protect the public by providing reasonable assur­ recommended by the Veterans Adminis­ Refresher Course ance that persons using the designation tration, endorsed by the President, and The publication, Contemporary Account­ ‘certified public accountant’ have given already passed by the House as a part of ing, in its final form, includes 700 pages satisfactory evidence of professional quali­ HR 3749. of printed matter. Less than 50 copies fications for public accounting practice, Second, it was urged that veterans at­ remain unsold of the first printing of and tending short, intensive refresher courses 9,600 copies. Plans are now being made “W her ea s, It is the desire of the Amer­ beyond commuting distance of their for a second printing, which is expected ican Institute of Accountants to provide homes be given adequate subsistence to be ready for sale about February 1. every legitimate assistance to veterans con­ allowances on a per diem basis to be In its report to council, the committee sistent with the maintenance of adequate established by the Veterans Administra­ professional standards and proper safe­ on refresher course announced the follow­ tion and payments for travel to and from guards to the public, ing formal classes already organized or places where the refresher course is planned, in which Contemporary Account­ “B e it resolved, That the American given. This amendment is not incorpor­ Institute of Accountants is opposed to any ing will be used: ated in HR 3749 as it has passed the legislative action which would give any A. Frank Stewart, President of the Vir­ person the right to the title ‘certified public House. ginia Society of Public Accountants, ar­ accountant’ except as a result of an exam­ Third, it was urged that changes be ranged for a course at the University of ination offered by a duly constituted state made in the present law relative to cor­ Richmond. An instructor of the University board of accountancy, with appropriate respondence courses which are sponsored acted as chairman and the Society pro­ preparation through education and public by the Veterans Administration. Under vided ten special lecturers. accounting experience. HR 3749 it is not clear that such courses The Colorado Society of Certified Pub­ “Be it further resolved, that the can be given by regular educational insti­ lic Accountants has cooperated with the American Institute of Accountants believes tutions which have been giving classroom University of Denver in an arrangement it desirable that each state board, to the instruction, but which have not heretofore under which it supervised the operation fullest extent possible under the account­ given correspondence courses. of the course and furnished instructors. ancy act of the state in which it operates, Fourth, it was proposed that the Vet­ This course consists of five sections which shall recognize and accept military service erans Administration be authorized to together provide meetings two nights a of veterans which is reasonably the equiv­ week throughout a school semester which pay for books for home study under care­ alent of education and experience required ends in December 1945. in the state for the certified public ac­ fully defined restrictions to prevent abuse. The education committee of the Massa­ countant certificate.” Accounting veterans and other profes­ chusetts Society of Certified Public Ac­ J. L. C. sional men who have served in the armed countants arranged a program of eight The Certified Public Accountant 5 meetings for discussion of selected chap­ Treasurer OUTSTANDING SERVICE TO ters. These meetings started September THE PROFESSION 28 and will end on November 30. The Michigan Association and the Uni­ Continuing a practice initiated by the versity of Michigan made plans for a Institute last year, three annual awards, joint sponsorship of a course in Detroit in the form of engraved citations, have which is expected to have an enrollment been presented to Victor H. Stempf, W. of approximately 100 persons. The University of California scheduled W. Cooper, and Eric L. Kohler, in recog­ a course to start November 8. This course nition of their distinguished contributions will contain twenty two-hour meetings. to the welfare and literature of the ac­ Public accounting firms in San Francisco counting profession within the past year. are supporting the course and cooperat­ Mr. Stempf is recognized for his work ing in providing lecturers. as a member of the five-man Committee Since the committee’s report was sub­ on Postwar Tax Policy, headed by Ros­ mitted to council, information regarding well Magill, former Undersecretary of the the following additional courses has been Treasury, which has recently published, received: under the auspices of the Falk Founda­ Texas Christian University began a tion, its 275-page report, “A Tax Program course in Contemporary Accounting on for a Solvent America.” This report has September 19, 1945, in the Evening Col­ attracted wide and favorable public notice lege. The course is taught by the Dean Mr. Stempf was appointed to the Commit­ of the School of Business, Ellis M. tee when he was president of the Amer­ Sowell. It is reported that the course is can Institute of Accountants, and was the being enthusiastically received there. only certified public accountant on the The University of Wisconsin in Mil­ Maurice E. Peloubet Committee, which included Fred R. Fair­ waukee has announced two courses based Maurice E. Peloubet is a partner of Pogson, on the text, Contemporary Accounting. Peloubet & Co., New York. Since joining child, Knox Professor of Economics, Yale The first course will start November 2, the Institute in 1920, Mr. Peloubet has served University, Rowland R. Hughes, Con­ the organization in many capacities. He was 1945, and will deal chiefly with federal troller of the National City Bank of New vice president, 1940-1941, and treasurer, 1944- York, and Thomas N. Tarleau, formerly taxation. The second course will start 1945, and has been a member of council and March 29, 1946, and will deal with of the executive committee. He has previously Legislative Counsel for the Treasury De­ accounting principles, auditing procedure, served as chairman of the board of examiners partment. The Institute’s committee on and accounting systems. The course is and of the committees on membership, pub­ annual awards, as stated in its October re­ lic information, state legislation, and students port to council, feels that Mr. Stempf’s intended for veterans and others who societies; and as a member of the commit­ have had experience in public accounting tees on accounting procedure, auditing pro­ participation in this work, which has won at the semi-senior or senior level. Chester cedure, budget and finance, publication, and wide public attention, reflects great credit R. Macklin, president of the Wisconsin a number of others. He is a certified public on the accounting profession. accountant of New Jersey, New York, and Eric L. Kohler, many years a member Society of Certified Public Accountants, is Texas, and a past president of the New Jersey scheduled to speak at the first meeting, Society of Certified Public Accountants. Mr. of the Institute’s committee on govern­ November 2. The course is under the di­ Peloubet was a member of the executive mental accounting, and W. W. Cooper, rect supervision of James H. March, Asso­ committee of the International Congress on member of the faculty of economics at the ciate Professor of Accounting. Accounting held in New York in 1929 and was a delegate to the International Congress University of Chicago, are recognized for The St. Louis Chapter of the Missouri on Accounting held in London in 1933. He their article on “Costs, Prices and Profits Society of Certified Public Accountants was for a time consultant to the War Produc­ Accounting in the War Program,” which has planned a series of meetings to dis­ tion Board and to the U. S. Navy Depart­ was published in The Accounting Review cuss the material contained in Contem­ ment. He is now in Europe on an assign­ ment for the Corporation Audits Division of for July 1945. The committee believes porary Accounting. The meetings are the General Accounting Office. that this article is the first authoritative scheduled to start November 8, 1945, and analysis of the extent to which account­ will extend through March 7, 1946. All COOPERATIVE CLINICS ing was utilized by the federal govern­ sections of the publication are covered in A series of six cooperative clinics, in ment in wartime price control, contract the list of topics for the proposed meetings. which Walter L. Bradley of Buffalo, New renegotiation, war procurement and re­ Letters expressing interest in planning York, chairman of the Institute’s commit­ pricing, and contract termination, and that a course indicate that there are prospects tee on cooperatives, discussed technical it shows wide research, skilful marshaling of classes being organized in Los Angeles, problems, were held during the latter part of facts, and thoughtful conclusions. The Oklahoma City, Cleveland, Roanoke, and of October and early November in the article will, it is felt, provide a valuable New York City. following cities: Indianapolis, Ind.; Colum­ record of wartime trends in the use of T h o m a s W. L e la n d , bus, Ohio; Boston, Mass.; Syracuse, N. Y.; accounting and will stimulate speculation Educational Director. New York, N. Y.; and Philadelphia, Pa. as to probable future trends. 6 The Certified Public Accountant

of accountants employed by him at the On-the-Job Training for Veterans in time of making the application and the total number expected to be employed Public Accounting during the next peak season. 4. The employer should state the number A number of state societies and public public accountant. In the large establish­ of trainee veterans that he desires to accounting firms have expressed consider­ ment there would usually be a greater employ under the training program able interest in on-the-job training in pub­ degree of organization and delegation of provisions of the Servicemen’s Read­ lic accounting, and it accordingly seems responsibility for administration of the justment Act of 1944. desirable to outline in considerable detail training program. 5. The employer should state that such The very nature of the work performed trainees when employed would be con­ the essential features of the Michigan by the trainee in public accounting is such sidered to be permanent employees as plan. The Michigan committee prepared that it provides ample opportunity for distinguished from seasonal employees, the following standards for the use of work experiences of increasing difficulty provided, of course, that the trainee public accountants and public accounting and an opportunity to learn the practical shows a general aptitude for the job firms in seeking approval as training es­ application of accounting principles and and makes satisfactory progress during tablishments: procedures. This is recognized by the the training period. statutory requirement for “training-on-the- 6. The employer should state the wages General Statement job” referred to in the introductory state­ currently paid in his establishment to The employer submitting a training ment. The employer seeking approval of the trainee beginner and the wages cur­ program for approval should be an indi­ his training program should, nevertheless, rently paid by him to an employee who vidual certified public accountant, a firm agree to assign work in such a manner has just attained the certificate as a of certified public accountants, or a pub­ and to furnish related instruction and certified public accountant. (The dif­ lic accountant that is registered to prac­ counsel by a qualified certified public ac­ ference between the wages actually paid tice public accounting in Michigan. A countant to the end that the trainee may to the trainee and the wages specified copy of the annual register issued by the progress as rapidly as his capacity to learn in the application as the goal constitute Michigan State Board of Accountancy will may permit. the differential for determining the sub­ be furnished to the Department of Public As to the general aptitude required of sistence to be paid to the veteran sub­ Instruction. a trainee in public accounting, he should ject to the maximums provided in the The occupation to be stated as the em­ be a person of better than average native Act.) ployment objective will ordinarily be that ability, his character should be of the high­ of “Certified Public Accountant.” Such est standard of honesty and integrity, and It is recognized that in the public ac­ objective adequately covers those who de­ he should have both a good personality counting profession wages paid to trainees sire to specialize in any particular field of and good health. The certified public vary considerably depending upon the par­ public accounting, either before or after accountant occupies a position of responsi­ ticular qualifications of the individual. In attaining the certificate of Certified Pub­ bility to both his client and the public. the case of the beginner, his age, educational lic Accountant. For this reason it is necessary to maintain background, and experience in other fields When a trainee obtains a certificate as the highest possible degree of public con­ of accounting are important factors. Wage a certified public accountant, he usually fidence in the ability, integrity and inde­ adjustments during the training period continues as an employee of the same em­ pendence of the profession, and to main­ also vary, depending upon the ability, ployer. He would, however, be in a posi­ tain high standards of technical work and progress, and achievment of the individual. tion to engage in public accounting on his professional conduct. Considering the probable ages of trainee veterans under the GI Bill, it is believed own account or in private accounting. Normally, a certified public accountant has Specific Information to be Included in that the range of wages to be established no difficulty in finding employment of his Application for Approval of Training by the employer, for the above purpose, own choosing. Program should be based upon his current policy with respect to beginners in the younger The ratio of trainees to the total num­ An application for approval of the es­ ber of employees may well be relatively age group and with certified public ac­ tablishment as a “training establishment” countants in the 25-30 age group. high. Employers in the public accounting should be filed with the Department of profession range from the large national Public Instruction, State Capitol Building, 7. The employer should state the normal firm to the individual certified public ac­ Lansing, Michigan. The application may hours of work per week and should also countant practicing in his own name. point out that the hours are fluctuating be in the form of a letter addressed to the Even the individual certified public ac­ and that during seasonal periods long Department and should contain the fol­ countant frequently has one or more non­ hours of work may be required. lowing facts and information: registered accountants on his staff, all of 8. The employer should state briefly his whom may be eligible under a training 1. The employer should state that he is general requirements for the selection program. engaged in the practice of public ac­ of a trainee and his general policies of The organization and administration of counting, either as an individual or as employment. a training program within a public ac­ a firm, and that he is registered to prac­ 9. The employer should submit a descrip­ counting establishment may vary consid­ tice in Michigan by the Michigan State tion of the type of work to be done by erably depending upon the size of the es­ Board of Accountancy. the trainee in his establishment. tablishment. In the small establishment 2. The employer should state the length 10. The employer should submit a brief the training would very likely be handled of time that he has been in business. outline of his program of the related almost entirely by the employer certified 3. The employer should state the number instruction and counsel to be given to The Certified Public Accountant 7

the trainee by his immediate super­ visor, or supervisors, in the establish­ Accounting Research ment. 11. The employer should assert that he Accounting for Expenses and Losses Accountants, and other professional will use his best efforts to assign work Allocable to Income of the War Period groups. Comments and suggestions of to the trainee in such a manner that members and others relative to the subject the work will provide work experiences The statement relative to expenses and will be transmitted to the subcommittee of increasing difficulty for the trainee losses allocable to the income of a war currently considering the problem of ac­ as rapidly as he can assume additional period, which appears in the November counting for war expenses and losses. responsibilities. The employer should issue of The Journal of Accountancy, dis­ also agree to supplement the work ex­ cusses an important current problem of in­ Subcommittee on Mining Accounting perience by related instruction and counsel by one or more qualified certi­ come determination and income statement The chairman of the committee on ac­ field public accountants in his estab­ presentation. Many costs, expenses, and counting procedure has appointed Maurice lishment. losses to be incurred or determined imme­ E. Peloubet and C. Oliver Wellington of 12. The employer may incorporate, by ref­ diately or soon after the end of the war the committee, and John M. Carson, erence, any part or all of the proposed will be affected by events or situations of Henry B. Fernald, and Thomas A. standards for approving training pro­ the war period, but unless it can be dem­ Mackenzie, Institute members, to serve grams for the public accounting pro­ onstrated clearly and convincingly that as a subcommittee on mining accounting. fession as submitted by the Michigan they are applicable to the company’s war­ The work of the subcommittee will be Association of Certified Public Ac­ time operations they should be reflected as devoted to a study of the principal fea­ countants to the Department of Public tures in which mining accounting differs Instruction. The employer should be charges to income for the period in which careful to explain fully any important they are sustained. When expenses or from commercial accounting as applied to difference between his proposed train­ losses accounted for in postwar years are manufacturing and trading enterprises. ing program and the standard sub­ clearly allocable to wartime operations, Problems to be reviewed might include: mitted for the profession. their exclusion from the computation of the valuation of mining claims or other * * * current income is appropriate to provide rights to mineral resources or properties; It should be noted that the objective of more informative financial statements. the method of accumulation and alloca­ on-the-job training set up in the Michigan The effect of these exclusions, properly tion to cost of charges for development, plan is the attainment of a CPA certificate classified and described, may be disclosed exploration, and similar activities; the by the trainee. Using this objective the by methods including (a) reporting method of determining when a property plan applies not only to new employees charges for such expenses and losses off­ passes from the development to the oper­ who have served in the armed forces, but set, in the same section of the income ating stage; the nature and incidence of also to former employees who have had statement, by transfers from war reserves, the depletion charge related to taxation such service. Furthermore, the plan ap­ (b) presenting statements of the reserves and the presentation of financial state­ plies to all classes of staff members—ju­ in which direct charges to the reserves for ments; the relation of the exhaustion of niors, semi-seniors, and seniors who need war expenses and losses are reported and mineral resources to the depreciation training in preparation for the CPA ex­ drawing attention to such charges by ap­ charge; the “completed plant” theory of amination. It is reported that the arrange­ propriate disclosure in the income state­ capitalization; the desirability of continu­ ments which have been approved for the ment, and (c) displaying, immediately ing to use for mining companies a form Detroit area have generally provided a following the income statement, prefer­ of financial statement developed from the starting range of from $125 to $175 a ably on the same page, supplementary data practices of trading and manufacturing month, and, in cases of advanced levels, disclosing current items of war cost or ex­ enterprises; and the relation between oper­ compensation as high as $300 to $350. As pense which have been charged directly ating statistics and the financial accounts. provided in the veterans legislation, these to a war reserve or to surplus during the Accounting for Fully Amortized compensations may be supplemented by a period. The procedures suggested in Ac­ monthly benefit of $50 in the case of a counting Research Bulletin No. 23 should Facilities single individual or $75 in the case of a be used to report the effect upon taxes of The accounting treatment of proper­ married veteran. such excluded items. ties having substantial usefulness and It is also noteworthy that the committee Copies of the statement have been trans­ value, the costs of which were amortized of the Michigan Association has now been mitted to representatives of state socie­ during the war period at rates permitted requested by the Superintendent of Pub­ ties, American Accounting Association, for tax purposes by Section 124 of the lic Instruction in Michigan to pass on all Controllers Institute, Edison Electric Internal Revenue Code, is the subject of applications for the approval of firms and Institute, National Association of Cost a statement to be published in the Decem- individuals as training establishments to offer on-the-job training. After an appli­ cation has been approved by the commit­ ciety interested in working out a plan for formation as to the approving agency of tee, it goes to the Superintendent of Public on-the-job training should communicate the state and full information as to the Instruction for final approval. with the regional office of the Veterans procedure to be followed in providing for It is suggested that any other state so- Administration. This office will have in- this training. 8 The Certified Public Accountant ber issue of The Journal of Accountancy. ACCOUNTING AND LABOR- the company concerned. It is the account­ This statement is being written by the di­ MANAGEMENT ing process which measures costs and rector of research to provide a general profits and the certified public accountant discussion of the problems involved and to Under date of October 31, the president is particularly skilled in ‘fact-finding’ tech­ reflect the current trend of thought in of the Institute addressed the following niques. Published statements of many commentators on the wage problem indi­ respect to their solution. Comment and letter to Ira Mosher, president of the Na­ cate that they have too little understanding tional Association of Manufacturers; Eric criticism will be invited in order that the of accounting. I suggest that certified Johnston, president of the Chamber of views of the members of the Institute may public accountants should be included be brought to the attention of the com­ Commerce of the United States; Lewis B. among any group of technicians whose mittee on accounting procedure in its con­ Schwellenbach, Secretary of Labor; Wil­ assistance may be called for in the de­ sideration of the subject. liam Green, president of the American velopment of fact-finding techniques re­ Federation of Labor; Philip Murray, pres­ lated to collective bargaining. Professional Meetings ident of the Congress of Industrial Organ­ “Certified public accountants have on In addition to meetings previously re­ izations; and Henry A. Wallace, Secretary occasions made investigations leading to ported, committee members and the di­ of Commerce: reports which were utilized as a basis for rector of research have accepted invita­ wage negotiations. It is hoped that you “If the labor-management conference will give consideration to these suggestions tions to discuss current problems in which you are arranging beginning No­ accounting and auditing at the following in preparing any future statements on the vember 5 results in the creation of any subject for publication.” professional sessions: advisory body in which technical assistance October 31, Illinois Society of CPA’s, would be helpful, I should like to suggest Chicago, George D. Bailey. that a certified public accountant be in­ cluded in that body. RESOLUTION FOR NON-PARTISAN November 8, New Jersey Society of “Costs, prices and profits are at the CPA’s, Newark, James L. Dohr. heart of many labor-management con­ TAX COMMISSION November 10, Michigan Accounting troversies. It is the accounting process The report of the executive committee Conference, Ann Arbor, Maurice H. which measures the cost-profit relationship Stans and Cyril Talbot. and certified public accountants are par­ to the council pointed out that last year ticularly skilled in fact-finding techniques. the Institute had pressed vigorously a November 29, Iowa Society of CPA’s, It is evident from public statements that recommendation to the Congress that a Des Moines, Cyril Talbot. many commentators on the wage prob­ non-partisan tax commission of account­ November 30, North Carolina Society lem have little understanding of account­ ants, lawyers, and others expert in taxa­ of CPA’s Symposium, Chapel Hill, Car­ ing. The presence of a certified public tion be created to draft a simple revenue man G. Blough. accountant at the conference table might law expressing a permanent and consistent in many cases eliminate confusion and policy of federal taxation. This suggestion C a r m a n G. B l o u g h , misunderstanding. Director of Research. attracted widespread and favorable com­ “I believe that members of the account­ ment in the public press, and among ing profession could be helpful in dealing organizations and individuals interested. with both the general and particular as­ Several members of the Ways and Means PRESS RELEASES pects of the problem at the national, state, or local level. Representatives of this In­ Committee introduced bills to give effect Press bureau operations at the October stitute would be glad to discuss the matter to the Institute’s proposal. The Institute 1945 meeting of the Institute’s council in with your further if you believe that this advocated these bills as vigorously and as Chicago resulted in distribution of a num­ idea has merit.” energetically as it could, and the American ber of news dispatches by the Associated Bar Association supported it to a consid­ Press and United Press. These included On the same date, the following letter erable extent. Last fall the president and announcement of the new officers of the was sent to the Twentieth Century Fund: other representatives of the Institute met Institute; announcement of the 1945-1946 “I have read with great interest the sum­ informally with a number of members of officers of the Advisory Council of State mary, in the New York Times for October the Ways and Means Committee who had Society Presidents and of the Association 29, of your special report recommending shown an interest in this proposal. It of Certified Public Accountant Examin­ creation of a management-union council was the consensus that there was little ers; and summary of a council resolution on collective bargaining. Of particular hope of early enactment of legislation to urging the establishment of a non-partisan interest was the sentence stating that your give effect to the proposal to create a non­ tax commission. report ‘urged that both sides make greater partisan tax commission, despite the fact use of such technical assistants as econo­ Dispatches sent out by the two national that no one had openly opposed the plan mists and engineers, and that they develop press agencies also included addresses by impartial fact-finding techniques, so that and it had received widespread approval. T. Coleman Andrews, director of the bargaining adjustments can be based on The principal reasons for its failure to Corporation Audits Division of the Gen­ the facts rather than on compromises that make progress were: (1) the preoccupa­ eral Accounting Office, and Dr. Ben D. have little relation to them.’ tion of Congress with wartime problems; Wood, project director for the Institute’s “The ‘facts’ involved in collective bar­ (2) the feeling of a large number of committee on selection of personnel. gaining are often the costs and profits of members of the Ways and Means Com­ The Certified Public Accountant 9

mittee that creation of an independent 25 Years with the Institute INSTITUTE STAFF POSITIONS commission would amount to a delega­ OPEN tion of the authority of that Committee to initiate tax legislation. Technical Assistant In the meantime, a number of tax plans The position of full-time technical as­ have been published by various organi­ sistant to the American Institute of Ac­ zations, including the Institute’s commit­ countants committee on federal taxation tee on federal taxation, most of which is at present unoccupied, and suggestions contain excellent suggestions. Many of of suitable applicants by members will be these plans purport to meet only the welcome. The duties include research on immediate problems of the early postwar tax problems under the direction of the years. Some of them show a longer range committee, correspondence, arrangements viewpoint. All of them, no doubt, will be for meetings, preparation of agenda and studied carefully by the experts of the minutes, drafting of reports, and similar Treasury Department and the Congres­ tasks. Familiarity with federal income-tax sional committees on internal revenue law and procedure, and facility in writ­ taxation. Some of the recommendations ing, are the principal qualifications desired. may find their way into proposed tax legislation. Other proposals will undoubt­ Research Assistant edly be attacked by opposing groups. Employment of a second full-time re­ It seems that while a tremendous James D. W ood search assistant to aid the director of re­ amount of tax research has been done search has also been authorized. This there remains an urgent need for an Twenty-five years ago this month, James D. Wood came to the Institute as superin­ position requires a knowledge of the theory authoritative body of competent students tendent of the building at 135 Cedar Street, and practice of accounting and auditing. of taxation invested with the duty of sift­ New York. He is a native of Durban, Natal, Applicants with both public accounting ing the multitude of proposals that have South Africa, but spent eight years in Eng­ and teaching experience would be pre­ been made, and offering the Ways and land before coming to this country. He as­ sists with the assembling and shipping of ferred. Means Committee a tax plan for the examination material and with the mailing future which will reconcile conflicting of publications and other material to mem­ points of view, which will simplify the bers. present inexcusably complex structure, and which will provide a permanent basis of comparatively simple revenue law which OFFICERS AND STAFF taxation with provision for fluctuating will express a permanent and consistent T. Dwight Williams, president of the rates to meet varying revenue needs. In policy of federal taxation with a provision Institute, and John L. Carey, secretary, order to emphasize the need for such a for fluctuating rates to meet varying rev­ enue needs, and addressed meetings of state societies of body and to attract public attention to certified public accountants early this “W hereas, This proposal has received the proposal, at the recommendation of month, as follows: annual meeting of the the executive committee the council widespread support in the public press and among organizations and individuals Oklahoma Society at Tulsa, November 3; adopted the following resolution: interested in taxation, and meeting of New Mexico Society at Albu­ “W h ereas, Since the enactment of the “W h e r e a s , N o visible progress has been querque, November 5; annual meeting original income tax law in 1913 there made by Congress toward development of of Arizona Society at Phoenix, Novem­ have been twenty-two statutes making re­ a permanent and consistent policy but one ber 6; meeting of El Paso Chapter of the visions thereof, passed respectively in 1916, law follows another as stop-gap make­ Texas Society at El Paso, November 7. 1917 (two), 1918, 1921, 1924, 1926, 1928, shifts to meet immediate emergencies; Maurice Austin, chairman of the com­ 1932, 1934, 1935, 1936, 1937, 1938, 1939, “Be it resolved, That the council of the mittee on federal taxation, addressed a 1940 (two), 1941, 1942, 1943, 1944, and American Institute of Accountants hereby 1945; and the council of the American In­ declares its belief that the orderly progress meeting of the Georgia Society of Certi­ stitute of Accountants believes that such of the national economy would be fostered fied Public Accountants at Atlanta on annual revisions of the tax laws have re­ by development of a permanent and con­ November 10. sulted in the creation of a very complex tax sistent policy of taxation, and earnestly Frank A. Gale, assistant secretary, spoke structure which is highly detrimental to recommends to the Congress that a non­ at a meeting of the West Virginia Society, the prosperity and well-being of the coun­ partisan commission, composed of quali­ October 26. try, and fied students of taxation, representing Thomas W. Leland, educational direc­ “W h ereas, The American Institute of various economic and social viewpoints, be tor, addressed the New Jersey Society’s Accountants has recommended that Con­ created immediately to draft a national symposium on “The Education of the gress establish a qualified non-partisan tax policy, with the understanding that CPA for the Postwar Era,” October 29. commission, composed of members of the authority to adopt or reject its pro­ Congress, representatives of the Treasury posals and to initiate tax legislation shall Mr. Leland’s subject was “The Educa­ Department, and independent lawyers, remain with the House of Representa­ tional Program of the American Institute accountants and economists, to write a tives as provided by the Constitution.” of Accountants.” 10 The Certified Public Accountant

The Voice of the Membership

Comments on the New Certified Public European Assignment a few trappers. As Swinburne described Accountant Maurice E. Peloubet and Commander another place, it was ‘A land that is lone­ Following are excerpts from letters to Jacob S. Seidman are now in Europe on lier than ruin.’ It has its own rather frightening beauty, nevertheless. Black, the editor of T h e C er tifie d P u b lic A c­ an assignment for the Corporation Audits flat-topped hills, the orange-yellow birch, c o u n t a n t , commenting on the new format Division of the General Accounting Office. of the bulletin. The opinions of other read­ Printed below are excerpts from letters picked out with a little early snow, the ers would be welcome. written by Mr. Peloubet enroute and in black pines, and the ever-present lakes London. and swamps make a fine picture to look Sa m u e l J. B road, N ew Y ork , N . Y .: at but not to live in. I have read and reviewed with interest P rocessing G oose H arbor the first issue of T h e C er tified P u blic “We spent Friday (September 26) be­ “About five-thirty we landed at Goose A c c o u n t a n t in its new form and would ing ‘processed’ and ‘alerted’ at Fort Totten. like to congratulate you upon it. I think ‘Processing’ sounds like being laundered, Harbor, Labrador. You won’t find it on it should prove quite a valuable means of dry cleaned, or deloused, but it isn’t. It’s the map, but it is at the western end of keeping our members advised of intra­ just a little paper work. Different officers Melville Lake, northeast of Newfound­ professional matters. want to see different papers and we had land. Goose Harbor is a northern oasis a nice selection; something for everybody. of the first order. After checking in we H. A sh l in D yk es, S t . L o u is, M o .: One of the cheerier parts of processing is were taken over to what is known locally I have read with interest the October ‘ditching briefing.’ This is a description as the ‘Hotel de Gink.’ We had expected 1945 issue of The Certified Public A c­ of difficult ways to get out of an impos­ some sort of refined flop-house but were c o u n t a n t and am heartily in accord with sible situation. You are told how to be­ pleasantly disappointed. The public rooms the purpose of the bulletin as expressed have in a crash landing on water, how to were large, clean, and cheerful. There was in the first paragraph of the secretary’s inflate your ‘Mae West’ and how to leave a bar. We had steak for dinner preceded notes on page one. the plane quietly and in order, assuming by an excellent Martini. We retired for a It is my thought that the small size page it doesn’t disintegrate. There is, you are few hours rest in a room furnished like previously used is much preferable to the informed, ample time to do everything, a hotel room with running water. I guess size used in the October issue. While as a land plane crashing on water gen­ the boys on an isolated post like this must the larger page has certain advantages, erally floats 40 seconds to 2 minutes. do fairly well by themselves or go crazy. it is my thought that the smaller pamphlet In any event they have done a fine job is more convenient, both for filing and O n t h e A lert here. . . . general use. “We were told we were to be ‘alerted’ D e st in a t io n It also seems to me that the general ap­ about seven that evening and were free pearance of the bulletin heretofore issued for the afternoon. We wandered around “We arrived at Bovingdon Airport, has more of the dignity which might be the post awhile enjoying the sea breezes northeast of London, and were met by a expected of a publication of a professional and looking for something to do. We colonel from Combined Chiefs of Staff. organization. May I suggest that the pro­ saw a place which was entitled ‘alert . . . The first day in London was a suc­ fessional tone of the entire bulletin would lounge.’ The effort of visualizing an alert cess so far as work went, but it was a be improved by the use of a well-designed lounging attitude was too much for us, rather disheartening experience otherwise. dignified cover sheet which would be the so we went to the ‘officers’ tap room.’ W ar-torn L o ndo n same from month to month and which O ver L abrador “I did not get to the worst damaged would not contain text matter. “The Laurentian highlands, rounded sections but where I was, Hyde Park, The foregoing comments are submitted and pine covered, gradually gave way to Grosvenor Square, Piccadilly, and Regent with the hope that they may be of some the lakes, swamps, scrub pine and birch of Street, roughly, there were plenty of constructive value, not with a view to Labrador. The birch had turned and bombed out buildings. Everything was being critical. were brilliant yellow and orange. The neatly cleaned up and the streets repaired, L . H. R oso ff, N e w Y o rk, N . Y .: swamps were brownish red against the but the buildings were still uninhabitable The October issue of T h e C ertified dark pines. It looked from the plane as and there were frequent gaps where the P u b lic A c c o u n ta n t was quite an im­ though you could go in any direction in buildings were gone entirely. It is a sec­ provement but I am of the opinion that a canoe with only short portages. After tion I know better than most parts of it would have been much better if put you had gone some distance, however, New York and it seemed terrible to me up in book form so that it could be placed you could still be nowhere. The place to see what wasn’t ruined so down-at- in a book case in the same manner as seems completely undisturbed, not a trail, heel, unpainted, and out-of-repair. The Journal of Accountancy. However, not a road. We were told the only men “The buildings and streets were bad I can very well get along with this as it is. that ever went through the country were enough but it seemed to me that the dam­ The Certified Public Accountant 11

ages to the people were worse. Not that they didn’t look fairly well nourished and somewhat better dressed than I had ex­ Professional Ethics pected. Nearly everyone has a tense, drawn look as though they had seen and endured What Constitutes Advertising? almost more than their strength could be no criticism if the card appeared every day for say one week. stand and were unable to forget it or get The following letter from a member “Cards should be sent through the mails over it. They don’t say anything to indi­ and the Institute’s reply may be of general only to personal acquaintances, not pres­ interest: cate this and look fairly animated when ently served by public accountants. It they are talking but as soon as their faces “A question has arisen on which I do should be noted that rule 7 prohibits are in repose that pitiful look comes on not feel competent to pass, either before solicitation of clients of other public ac­ again. This is particularly noticeable to or after reading the rules; and other per­ countants, not only those of other certi­ me as in the worst part of World W ar I sons who have been asked likewise can fied public accountants or other members the people were full of bounce and rough express only their personal opinions, which of the Institute. do not carry official weight. humor. In this war they have proved they “Speaking before organizations of vari­ “A CPA who had been in practice for can take it but it has taken a terrific toll, ous sorts and the publication of articles many years in a large city moved away. written by the accountant concerned are even from those who are alive and He is now located in a state where there well. . . . not regarded as advertising. There is no are only a few degreed men practicing, limitation on such activities, which are “The last time I was at Grosvenor House none within perhaps 75 or 100 miles. He generally regarded as proper and desir­ was in 1933 at the International Congress wishes to inform the community where able. on Accounting. . . . he is now living, and those within 15 to “However, distribution of reprints of ‘‘I have not gone into any shops and 25 miles around, in all of which he hopes articles appearing in publications, to per­ probably shall not, but judging from the to develop a clientele, of his arrival and sons presently served by other public ac­ windows there is almost nothing to buy, willingness and right to practice. Being countants, might be the basis for com­ and prices are terrific. I am sorry not to a member of the Institute and other so­ plaint of violation of rule 7.” be able to give a better report, but London cieties, he wishes to conform to the spirit of restraint, the letter of which is not clear. is even worse than I thought it would “Rule 10 says he shall not advertise. What Are Professional Ethics? be. . . . Just what does that cover, in writing, From The South Carolina Certified O ur G ood L u c k printing, word of mouth? It limits an Public Accountant for July-September “We do not realize what a privilege it announcement (which must relate solely 1945: to change of address or personnel) to is to live in the USA. I think it is as a certain display in newspapers or mag­ “W hat are professional ethics? Why much our good luck as anything else, but azines. If he publishes the permissible have them and what good do they do? the fact remains that a decent life is pos­ ‘card’ in the local newspapers of these “Professional ethics are rules which gov­ sible with us and it is not possible here. contiguous towns, how long may it run? ern the members of a profession in their England is supposed to be better of! than Is he at liberty to mail an actual card, acts toward fellow practititioners and also the Continent. . . .” appropriately printed and enveloped, to their dealing with the public. As to why the business public of these towns: a few they should be, it is merely carrying out of whom doubtless retain occasionally the an established principle of long standing services of CPA’s from distant cities? It by making a record of the rules one is STUDENT RATE FOR JOURNAL has been his rule not to solicit the pat­ expected to follow if he wants to be a member of the organization which rep­ REDUCED tronage of the public being served by an­ other public accountant (see rule 7), when resents the profession he becomes a mem­ The student subscription rate for The he has reason to believe another man may ber of, in order that fairness may be prac­ Journal of Accountancy has been reduced be already engaged. What may he do in ticed at all times. As to the good they do, they set up a standard which must from $3.00 to $2.00, beginning November way of speaking before business bod­ be met in order to enjoy the benefits of 1. The regular subscription rate is $4.00 ies? In way of circulating business articles written by others or by himself?” the profession and also safeguard the a year. This latest reduction was made public from unscrupulous practitioners largely as a result of recommendations by The Institute’s reply: who would take advantage of member­ teachers of accounting, who suggested that “Rule 10 permits publication of a ‘card,' ship in professional society to further their The Journal would be more widely utilized limited as to size and content by the selfish aims. in classroom work if the subscription rate terms of the rule, for the purpose of an­ “There are published elsewhere in this to students could be lowered. The $2.00 nouncing change of address or personnel. bulletin the rules of professional conduct rate barely covers production and distribu­ These latter phrases have been interpreted of the American Institute of Accountants, tion costs, but it is the belief of all con­ to include the opening of a new office. which is the national association of cer­ cerned that the profession will be well “The committee has never specifically tified public accountants. These rules of professional conduct have been adopted served by wider circulation of the Insti­ stated its opinion as to the length of time such a card may properly be printed in by the South Carolina Association of Cer­ tute’s official magazine among students of the public press. It should appear only a tified Public Accountants. Every member accounting. reasonable number of times, enough to of the South Carolina Association is honor accomplish its purpose. . . . There might hound to adhere to these rules.” ______12 The Certified Public Accountant What the Members Are Doing

Coordinator of Community Advisory Oak Leaf Cluster brought to complicated and unprecedented Service Center problems the highest professional skill. J. William Hope was appointed by the Major General Arthur H. Carter re­ Colonel McEachren developed principles cently received the Oak Leaf Cluster, with and rules relating to determination of Mayor of Bridgeport, Conn., as coordina­ the following citation: costs under cost-plus-a-fixed-fee and other tor of the Bridgeport Community Ad­ contracts; and adapted internal audit pro­ visory Service Center, an organization set “Major General Arthur H. Carter, serv­ cedures to the needs of wartime by such up to aid returning veterans of that com­ ing successively in highly responsible po­ accepted practices as selective auditing munity in their readjustment to civilian sitions in the Purchase and Contract and by the elimination of unnecessary life. Branch, Office of the Under Secretary of checking. A tremendous contribution to Mr. Hope was quoted in a recent issue War, as Director of the Fiscal Division industry and peacetime economy was the of the Connecticut State Journal as saying, and as Fiscal Director, Headquarters development and establishment under “We are trying to make every veteran feel Army Service Forces, from October, 1941, Colonel McEachren’s direction of princi­ he is returning to a community where to September, 1945, discharged his duties ples for termination accounting and audit­ everybody is interested in him and nobody with exceptional skill. Through expert ing. His excellent relations with the is taking advantage of him. The Center supervision he expeditiously introduced General Accounting Office aided in mini­ necessary administrative innovations and mizing the number of formal exceptions by no means does all the work. It s just adaptations to maintain the speed, stabil­ and suspensions. The quality of Colonel a friendly place where the veteran can get ity, and efficiency of operations requisite McEachren’s service, his cooperative per­ whatever help he needs without running to the sound expansion of fiscal and finan­ sonality, and his outstanding skill gave around from pillar to post.” cial activities to meet the needs of global him an authority in his field which warfare. Under his direction, controls greatly simplified the application of audit Vice-President of Rotary Club were intensified to insure the proper use procedures under wartime conditions.” Charlton N. Carter has been elected of funds and to provide for adequate ac­ second vice-president of the Rotary Club counting for government property. Fiscal The Legion of Merit has also been con­ recording and reporting were placed on a of Indianapolis. uniform basis throughout the military es­ ferred on Colonel Andrew Stewart, with Heads Business Fraternity tablishment to provide for the clear and the following citation: current interpretation of the over-all finan­ “Colonel Andrew Stewart, 0901056, Fi­ Kenneth B. White of Dallas, Texas, has cial situation. Maximum production from nance Department, Army of the United been elected Grand President of Delta industry was furthered by the prompt States, rendered outstanding service as Sigma Pi, one of the leading professional payments of invoices, simplified insurance Chief, Accounting and Audit Supervisory business fraternities in the country. Delta procedures and the accelerated implemen­ Branch, Fiscal Division, Headquarters, Sigma Pi has 48 chapters in leading col­ tation of legislation for advance payments Services of Supply, from 16 March 1942 leges of business administration and more and guaranteed loans. The personal finan­ to 14 May 1943, and as Deputy Director, than 16,000 members. Mr. White succeeds cial services rendered soldiers and their Office of the Fiscal Director, Headquarters, John L. McKewen of Baltimore, Md., also dependents were characterized by a high Army Service Forces, from 15 May 1943 a member of the Institute. Prior to his sense of responsibility, a genuine sym­ to date. During a period when the mag­ pathy for their problems and a consistent nitude of operations placed a great strain election as Grand President, Mr. White effort to assist them in every possible way. upon peacetime accounting and auditing served twelve years as a member of the General Carter rendered services of ex­ practices, he supervised the development Grand Council of Delta Sigma Pi. ceptional value in an enterprise unprece­ of accounting, auditing and pay allotments dented in its complexity and magnitude.” methods and procedures so effectively that Announcements and Promotions records were always current and informa­ Ernst & Ernst, Pittsburgh, announce tion made continuously available. He pro­ Citations that Ross K . C o n a w a y has been admitted vided outstanding leadership in foreign to partnership in the firm. for the Legion of Merit fiscal matters and his survey, study and Spark, Mann & Company, Boston, an­ report of fiscal programs and problems of nounce that Jo h n J. M cI saac has become Recently the Legion of Merit was con­ military government in the Mediterranean ferred on Colonel John W. McEachren, Theater provided the technical framework a partner in the firm. with the following citation: upon which fiscal plans for subsequent K e n n e t h W. H urst of T y le r , Texas, operations were made. His astute analysis has been promoted to the rank of full “Colonel John W. McEachren, 0902- of financial projects; his unfailingly good Colonel. Colonel Hurst is assigned to the 089, Finance Department, Army of the judgment in fiscal matters; and his uni­ Contract Audit Branch at Dayton, Ohio. United States, as Chief, Cost Accounting formly thoughtful and diplomatic personal Section, Fiscal Division, Services of Sup­ E m er so n L e C lercq of San Francisco, relations, both in the W ar Department and ply, from 7 April 1942 to 14 May 1943, C a lif., has been promoted to the rank of with other government agencies, enabled and as Chief, Audit Division, Office of the Commander, USNR (Supply Corps, New him to make contributions of exceptional Fiscal Director, Army Service Forces, York City). value to the administration of the Fiscal from 15 May 1943 to 5 September 1945, Services of the Military Establishment.” The Certified Public Accountant 13

ELECTION OF MEMBERS SUGGESTIONS WANTED ON SECTION 722 A la b a m a ERRATUM * Meriwether L. Smith, Wilson Dam It is expected that the Joint Committee In the “Analysis of Membership on Internal Revenue Taxation will hold A r k a n s a s in Professional Societies of Certified hearings soon on the administration of * Knox McLerkin, El Dorado Public Accountants,” which ap­ *Edward B. Sparks, Jr., Fort Smith Section 722 of the Internal Revenue Code, peared on page 16 of the October dealing with excess-profits tax relief. The C a l i f o r n i a issue of this bulletin, there were two committee on federal taxation would ap­ Maurice J. Creamer, Los Angeles errors in the figures for the State *Bernhard U. Krummel, San Francisco preciate receiving from Institute members of Rhode Island. The total state so­ *Jack M. Ostrow, Los Angeles suggestions which might be presented at ciety membership for Rhode Island these hearings. To be helpful to the com­ C o l o r a d o is 74, instead of 17, and the per cent William A. McDonald, Denver mittee, these suggestions should be re­ of total in state societies for Rhode ceived at the Institute’s office by Novem­ Connecticut Island is 89 instead of 20.5. * Allerton C. Hickmott, Hartford ber 30. Joseph Y. Smith, Bridgeport

F l o r id a STATE SOCIETIES Sidney Wasserman, Miami Beach Edward C. Parker, New York History of Accounting in Illinois D istrict of Columbia *Bernard Rubin, New York “In common with every other profes­ *B. Winfred Ruffner, Washington *Arthur J. Ryan, New York *Lyndon L. Scates, Washington Harold E. Stagg, New York sion, accounting has the obligation of re­ Roy Tarlow, New York cording its own history,” states the Illi­ Id a h o Stanley B. Tunick, New York *Waldo A. Thurber, Boise nois Society of CPA’s in its 1945-1946 Yearbook. “Fortunately, the profession O h io I l l in o i s includes men still living who remember S. Alexander Bell, Chicago *Jerry G. Kimbrough, Cincinnati *Robert J. Carlson, Chicago *George D. Kneip, Cleveland the early beginnings,” the item continues. *Maxwell O. Ehlert, Springfield *Clifton L. Lux, Cleveland Subsequently, Ernest Reckitt, historian of William Adam Fuller, Rockford Maurice Melincoff, Cleveland the Society, reported to the board of di­ Arthur J. Hamer, Chicago Richard C. Rea, New Philadelphia Calvin B. Wetmore, Canton rectors that he was engaged upon writing *Lester H. Peterson, Chicago the last half of the book, “History of Ac­ *F. H. Ziebell, Jr., Chicago O k l a h o m a counting in the State of Illinois,” and *John H. Klein, Tulsa I n d ia n a hoped to complete the work this year. *James Dincolo, Notre Dame O r e g o n *Alma Merkert, Marion John A. Givens, Portland Illinois Awards K a n s a s Delbert O . Kimberling, Portland At a meeting on October 31 the Illinois Leo J. Brinkman, Emporia Pennsylvania Society of CPA’s awarded its gold and K e n t u c k y Joseph Ellenbogen, Pittsburgh silver medals for attainment of the high­ *John W. Koernner, Louisville *Samuel J. Elias, Philadelphia est grades in the May 1945 Illinois certi­ *John A. Reisz, Louisville Robert F. Hauserman, Erie fied public accountant examinations to Lawrence H. Hufnagel, Pittsburgh L o u is ia n a the following: *Victor Lota, New Orleans South Carolina Frederick Arthur Church—Gold Medal †Junius H. Payne, Jr., Alexandria Ernest R. Daniell, Charleston William Robert Baker—Silver Medal *William J. Ready, Columbia M assachusetts A. Allen Aaron, Springfield At that meeting, the twenty-seven suc­ T e n n e s s e e John J. Fitzgerald, Boston cessful candidates in the May 1945 exam­ *John W. Campbell, Nashville inations received their CPA certificates *Carl A. Fischer, Jr., Chattanooga M i c h ig a n from representatives of the University of *Norman G. Currin, Detroit T ex a s Illinois. M is s o u r i *Howard L. Warren, Jr., Houston James R. Fleet, Kansas City *Lawrence L. Purjet, Galveston New State Society Officers

*Lavon E. Lovinggood, Dallas O h i o M o n t a n a William J. Finlay, Jr., Great Falls U t a h President—A. L. Brockway, Cleveland *Fred M. Oliver, Salt Lake City Vice-president—R. N. Lloyd, Dayton New Hampshire Secretary-Treasurer—R. S. Willcox, Nathaniel F. Bigelow, Jr., Manchester W a s h i n g t o n Columbus *Paul S. Ford, Seattle N e w J e r s e y *James W. Palmer, Seattle T e n n e s s e e Herman Moskowitz, Passaic President—E. R. Baylor, Johnson City W i s c o n s in Vice-president—W. A. Barclay, N e w Y o r k *Eldred G. Koepke, Milwaukee *William J. Frank, Rochester Memphis *Arthur Korotkin, Albany *Admitted as associates. Secretary—J. H. Talbot, Jr., Nashville Joseph O. Osgood, New York †Advanced to membership. Treasurer—D. G. Hixson, Chattanooga 14 The Certified Public Accountant What the Members Are Saying

Government and Business of the country in succeeding years. Some lators, administrators, economists, ac­ such agency is necessary if booms and de­ Hiram T. Scovill, Acting Dean of the countants, attorneys and others versed in pressions are not accepted as necessary the science and practice and administra­ College of Commerce and Business Ad­ atomic bombs interfering with the orderly tion of taxation. The results of true tax ministration, University of Illinois, in an progressive march of time. reform will be a balanced budget, because address before the Beta Gamma Sigma (8) There is no substitute for honesty, of mandatory provision that the inescap­ Alumni (referred to last month), after integrity, and the observance of the gol­ able relationship between expenditures giving consideration to a few of the many den rule by all parties, business, labor, and revenue be respected; the burden will factors which affect the welfare of the and other consumers. Our interest in pre­ be apportioned equitably among the sev­ country and of the world, formulated the serving American freedom and American eral groups of taxpayers; fiscal policy and following conclusions: goodwill for generations to come should revenue will be integrated; the relation­ cause all of us to sponsor any movement ship among tax-levying authorities will (1) The doctrine of laissez faire in which aims at the root of most of our have been explored and mutually deter­ spite of its great merits in some restricted national evils. mined; the statute will be stable, and areas and in some stages of civilization, changing revenue needs will be met by needs some modification in order to yield Tax Tinkering changes in rates fixed at the beginning the greatest economic benefits to society Following are excerpts from an article rather than near or after the close of the at this time. on “Federal Tax Revision—Its Scope and tax year; Congress will be spared recur­ (2) Free enterprise should be encour­ Pattern,” by Joseph J. Klein, which ap­ ring need for protracted consideration of aged as a necessary American institution peared in The Commercial and Financial annual or more frequent tax tinkering because it can serve the people adequately proposals, while business and industry and well and can yield for them greater Chronicle for October 18, 1945: will be freed from worry about uncertain satisfaction than other methods. “Tax revision is an immediate must. and threatening retroactive tax changes. (3) The federal government and, in On this there is universal agreement—ad­ The promise held forth by tax reform is appropriate instances, the state govern­ ministrative, legislative, public. It is rec­ so alluring that one wonders how soon the ments should exercise sufficient control ognized that wartime taxation will become tax commission will be created and put to over business to assure the existence of peacetime taxation only as the result of a work. Only through the type of tax com­ fair practices in business, to conserve nat­ series of transitional amendatory steps. mission such as I have described can we ural resources, to protect the public in The first of those steps was taken in the look forward to a sane and civilized tax­ labor-management difficulties, and to en­ Tax Adjustment Act of 1945, which was ing statute. Its creation is the final step courage and maintain free competition, or enacted on July 31, 1945; the second is in the pattern of tax revision—a consum­ to regulate monopolies in those cases being taken in the House bill now before mation devoutly to be wished.” where the latter might of necessity prevail. the Senate. Eventually there must be tax (4) The government should not enter reform, but before tax reformation is Fiscal Control Unit business in competition with private en­ achieved we appear destined to more mere Urging the immediate establishment of terprise, except in those few cases which, tax revision, more tinkering. . . . after long and thorough consideration of “Peacetime taxation cannot be achieved a federal fiscal control unit to make ac­ all factors involved, are found by the gen­ until war and war-induced expenditures counting a major factor in every govern­ eral public and the Congress to be for the have reached a level of about $20-$25 bil­ ment project, T. Coleman Andrews, di­ public good. lion. That means a drop of $75-$80 billion rector of the Corporation Audits Division (5) Business executives should manage from peak wartime expenditures. It also of the General Accounting Office, in a their respective enterprises for the main means expenditures of a magnitude three talk before Institute’s council meeting at purpose of producing and distributing times as large as our highest peacetime Chicago October 22, made the following goods or services and not for the juggling expenditures. Annual interest charges remarks: of financial structures for private gain. alone will exceed total receipts of the na­ (6) The business interests of the coun­ tional government for any year up to “The government often has been placed try I believe are willing to recognize the 1937, except during the three post-World at great disadvantage in its business un­ government should exercise reasonable War I years 1919-1921! . . . dertakings, especially those with other control over business in its various rami­ “The American Institute of Account­ countries, by failing to introduce account­ fications. I believe, however, that such ants, other profesisonal bodies, organiza­ ing, auditing, and fiscal control generally control should be in accordance with con­ tions of businessmen and labor, and at the planning stage of such undertak­ stitutional methods involving proper leg­ others, are now united in demanding a ings. islative, executive, and judicial functions commission of experts to draft fundamen­ “Had such a group been brought in to rather than annoying bureaucratic man­ tal tax reform. . . . establish fiscal control of lend-lease at its date without judicial review. “While officials speak of the need of very inception, we would have known (7) A reviewing agency, public or pri­ ‘thoroughgoing’ and ‘far-reaching’ and who owed whom and how much from vate, could aid materially if given ade­ ‘basic revision’ of our revenue laws, real day to day. As matters now stand, there quate power to avoid undue expansion of tax reform, as I have already said, is prob­ is no telling when or even whether an industry when it seems that such avoid­ ably possible only through the cooperative accurate accounting of lend-lease opera­ ance is necessary for the general welfare effort of a commission consisting of legis­ tions will be made.” The Certified Public Accountant 15

W . Ernest Seatree W. Ernest Seatree of New York, N. Y., senior partner of the Continental Euro­ Obituaries pean firm of Price, Waterhouse & Co., and a member of the London firm, died No­ vember 1 in London, where he had gone William B. C. Barrett W alter A . Staub in the interest of arranging for the re­ The Institute has just received word of Walter A. Staub of Short Hills, N. J., sumption of his firm’s practice after the the death on December 7, 1944, of William died of a heart ailment November 4, while war-time interruption. His age was 68. B. C. Barrett of New York, N. Y. He was visiting in Philadelphia. He was 64 years Mr. Seatree was born in Penrith, England, born in Germany 52 years ago. Mr. Bar­ old, and a native of Philadelphia. Mr. and in 1899 became a chartered account­ rett was treasurer and controller of the Staub was a partner of Lybrand, Ross ant of England. In 1902 he joined the Hugo Stinnes Corporation, New York, Bros. & Montgomery, having been associ­ staff of Price, Waterhouse in this country. having been associated with that firm since ated with the firm since a short time after His successful reorganization of the 1926. He became a member of the Institute his graduation from Girard College in finance, administration, and accounting of in 1933. Philadelphia in 1897. In 1911 he became the YMCA in Europe during World War a member of the firm and in 1914 was I won for him formal recognition of the H. Robert Drew transferred to the New York office. French Government and the commenda­ H. Robert Drew, partner of Livingston, A certified public accountant of seven tion of General Pershing. After the war Montgomery & Co. of Philadelphia, Pa., states, his first certificate was No. 48 of Mr. Seatree became the head of his firm’s died September 14 at the age of 56. He Pennsylvania, received in 1903. In 1933 European organization, with headquarters was a graduate of the Wharton School of and 1934 Mr. Staub was president of the in Paris. As a result of his work in inves­ the University of Pennsylvania. A CPA New York State Society of CPA’s and in tigating the accounts of the match business of Pennsylvania since 1928 and a member 1941 he was Dickinson lecturer of the of Ivar Kreuger, he was decorated by the of the Pennsylvania Institute of CPA’s, Harvard University Graduate School of Swedish Government. Returning to the Mr. Drew became a member of the Amer­ Business Administration. He was a mem­ United States in 1940, he worked in vari­ ican Institute of Accountants in 1937. He ber of the National Association of Cost ous capacities for the War Production was also a 32nd degree Mason, a member Accountants, of the New Jersey and Penn­ Board and the Smaller War Plants Cor­ of the Sojourner’s Club and of the White sylvania societies of CPA’s, and of the poration, and as executive director of Marsh Valley Country Club. Lawyers, Accountants, and Quill Clubs of American Relief for France. New York. He was president of the board Mr. Seatree received certificate No. 38 George F. Forster of trustees of Overlook Hospital, Summit, of Illinois in 1903, and in 1908 was presi­ George F. Forster of New York, N. Y., N. J. From 1924 to 1936 he was a mem­ dent of the Illinois Society of CPA’s. Sub­ died August 15, at the age of 90. He was ber of the Milburn, N. J., board of edu­ sequently he obtained the CPA certificates born in England and was a chartered ac­ cation. of Ohio, Pennsylvania, Missouri, and Wis­ countant there before coming to this coun­ Mr. Staub was also well known for his consin. He had been a member of the try. He became an American citizen in writings on professional subjects. At the American Institute of Accountants and 1911. Mr. Forster was for many years Congress on Accounting held at the St. predecessor organizations since 1905. From controller of the Cerro de Pasco Copper Louis Exposition in 1904 he was awarded 1916 to 1921 he was a member of the In­ Company, but had retired from business a prize for the best paper submitted on stitute’s council and from 1920 to 1921 activity some time ago. He had been a “The Mode of Conducting an Audit.” a member of the committee on arbitra­ member of the American Institute of Ac­ Since that time, he has written several tion. countants since 1922. books and many articles on accounting and taxation. He is the author of the John Wohnsiedler Clyde G. Hayes chapter on “Intangible Assets” in Contem­ John Wohnsiedler of Hollis, Long Is­ The Institute has just been informed porary Accounting, the refresher course land, N. Y., a member of the American that Clyde G. Hayes of Denver, Colo., for public accountants recently published Institute of Accountants and predecessor was killed June 30 when his Culver plane by the Institute. organizations since 1910, died September crashed into Mosca Pass near Alamosa, A member of the American Institute of 15, after an illness of nearly a year. Mr. Colo. He was born in Kansas in 1903. Accountants and predecessor organizations Wohnsiedler was vice-president and con­ Mr. Hayes was a former partner of Rees since 1905, Mr. Staub had long been ac­ troller of Union Bag & Paper Co. of New & Hayes in Alamosa, but for the past few tive in committee work. Recently he was York, having been associated with the years had been with the Signal Corps chairman of the committee on accounting firm since 1905. He received his CPA cer­ Supply Agency in Dayton, Ohio. He held procedure for several years. He had also tificate in the State of New York in 1909, the CPA certificates of Colorado, Okla­ served on the board of examiners, the and was a member of the New York State homa, and Texas, and had been a mem­ committees on inventories, public-utility Society of CPA’s. Mr. Wohnsiedler was ber of the American Institute of Account­ accounting, terminology, and a number of also a member of the Hollis Field Club, ants since 1939. other committees. and of the Civic Club at Amityville, L. I. 16 The Certified Public Accountant Applicants Recommended for Admission

The board of examiners has given con­ Louisiana Oklahoma sideration to applicants for admission to *William F. Hoerner, New Orleans Judson L. Bailey, Tulsa A. L. Breneman, Tulsa the American Institute of Accountants and Massachusetts *Robert E. Groth, Oklahoma City recommends the election of twenty-six ap­ Rae D. Anderson, Boston *Justin E. Vogt, Oklahoma City plicants for admission as members and *Norman Barraclough, Boston *Charles F. Fenn, Boston Oregon twenty applicants for admission as asso­ *G. Dale Belford, Portland ciates who have been accorded credit for Michigan Pennsylvania having passed examinations acceptable to *John J. Hewitt, Detroit Edlore J. LaFreniere, Marquette Samuel K. Allen, Philadelphia the board of examiners. Seventeen appli­ *James F. Bisset, Pittsburgh cants for admission as members and forty- *Robert J. Michaels, Marquette *Charles M. Miller, Detroit Duncan Bruce, Pittsburgh six applicants for admission as associates *Chester F. Weaver, Midland Louis H. Hass, Philadelphia have passed the Institute’s examination Thomas N. Herreid, Pittsburgh for a CPA certificate in cooperating states. Missouri Paul S. Linsley, Pittsburgh *Milton B. Rose, Philadelphia The board recommends two associates for James J. Anders, St. Louis *Alpheus C. Armstrong, Kansas City advancement to membership. Tennessee *Tilford M. Bredine, Kansas City *James L. Dallas, Memphis Henry V. Boehl, St. Louis Grover A. Bass, Memphis California Virgil S. Chandler, Kansas City *Eugene T. Ageno, Los Angeles *Patrick J. Dowd, St. Louis Texas *Fletcher Barker, Los Angeles George P. Eiswirth, St. Louis *Gilbert L. Bright, Dallas Leroy H. Cole, San Francisco *Fred C. Livesay, Kansas City *Lee Ella Costello, Houston Howard W. Finney, Los Angeles Warren J. McPhail, Kansas City Emmett B. Day, Houston Gerald M. Johnson, Sacramento *Edwin A. Paradoski, St. Louis *Charles H. Draper, Houston *John W. Kennedy, Los Angeles John T. Plunkert, St. Louis *Arthur J. Dowling, Amarillo *F. N. McClelland, Los Angeles *William B. Ferguson, Houston Nebraska *John P. Kinney, Corpus Christi Colorado *Clarke Adams, Omaha *Lucille Rorex, Fort Worth Charles A. Zarini, Denver *Robert W. Johnson, Omaha *David Straiton, Fort Worth Connecticut New Jersey Virginia Arthur M. St. Germain, Hartford Max Gottlieb, Passaic *W. Brooks George, Richmond *George F. Helfert, Jr., Richmond New York District of Columbia Washington *Samuel H. Cohen, Washington *Alfred B. Abraham, New York John M. Addison, New York *George O. Nelson, Seattle *Harry E. Schull, Tacoma Illinois *William G. Corey, New York *Roland Butow, Chicago Mark I. Fleischer, New York West Virginia †Lowell C. Doak, Chicago †Harry R. Hall, New York Milton Gessner, Wheeling Fred Elliott, Chicago Ferd C. Harwood, New York Joseph Rosenthal, Charleston Earle F. Erion, Chicago William W. Heberling, New York *Thomas F. Hawkins, Chicago *Leo Hyman, New York Wisconsin Joseph A. Kovac, Chicago *George Jaffe, New York *Francis A. Krause, Waterloo Leon T. Newman, Chicago *James J. Lyons, New York Lincoln F. Race, Green Bay *John Fisk Palmer, Chicago *John G. Quinn, New York *Chester E. Rubringer, Milwaukee Joseph M. Seamon, Peoria *E. Allan Reinhardt, New York *Leon Richman, New York Wyoming *Garnet S. Sharp, Chicago *Clara Raab, Casper *Jack T. Szold, Peoria *Bernard Rosenthal, New York Theodore F. Thulstrup, Chicago Franklin W. Rutherford, New York Puerto Rico * Samuel N. Zagaria, Chicago Louis Siegel, New York *Juan A. Gil, San Juan North Carolina Indiana *Indicates associateship. *W. Roy Brookbank, Winston-Salem †Indicates advancement to membership. *John E. Brown, Indianapolis *David Kittner, Elizabeth City Millard C. King, Indianapolis Cecil J. Kistler, South Bend Ohio These applicants do not become mem­ Marion A. Frye, Cleveland bers or associates until voted upon by Kansas William W. Jones, Dayton council and declared elected by the presi­ *Oliver J. Selfridge, Wichita *Ross W. McPherson, Cleveland dent. If protest is to be made against any *Robert B. Mertie, Toledo Kentucky Harold M. Nichols, Cleveland applicant on the list it should reach the *Clement F. Schildt, Louisville *Morton I. Soss, Cleveland office of the Institute on or before Novem­ *Ulysses S. Whalin, Louisville *George R. Zeiger, Cleveland ber 30. THE CERTIFIED PUBLIC ACCOUNTANT A Bulletin of The American Institute of Accountants

D e c e m b e r 1945 13 East 41st Street New York 17. N. Y.

Head of State Society Presidents Joel D. Harvey of Boston, Mass., presi­ The Secretary’s Notes dent of the Massachusetts Society of Certi­ Committee Appointments York to the total membership in New fied Public Accountants, was recently York is decidedly smaller than in many elected chairman of the Advisory Council N this bulletin principal committees states, while a few other states are over­ of State Society Presidents. The Advisory appointed for the fiscal year 1945-1946 represented in relation to the average. Council was created by amendment of areI announced. Personnel of other com­ It has been the general policy to rotate the Institute’s by-laws, at the time of the mittees will be included in future issues committee personnel about once every merger of the American Society of Certi­ of T h e C e r tified P u b lic A c c o u n t a n t . three years, that is, to change about one- fied Public Accountants and the American All committees will be listed as usual in third of the personnel each year. Excep­ Institute of Accountants, to maintain the 1944-1945 Yearbook which will prob­ tions to this policy are made when special closer cooperation between state societies ably appear early next spring. circumstances seem to make it advisable of certified public accountants and the This seems a good time to comment to maintain committee personnel for a national organization, to consider matters briefly on the procedure followed in the longer period, but this is infrequent. submitted to it by the council of the Insti­ selection of Institute committees. From tute, and in its discretion to make recom­ time to time members make suggestions Each summer, presidents of state soci­ mendations to the council of the Institute. as to committee personnel which the eties of certified public accountants are Mr. Harvey has been a member of the president of the Institute does not always invited to make suggestions for Institute Institute since 1932. He is a partner of find it practicable to follow. The com­ committee appointments, and the recom­ Lybrand, Ross Bros. & Montgomery. plaint is not infrequently heard that a dis­ mendations of the presidents are followed proportionate number of committee ap­ to the full extent practicable in the light pointments are made from New York. of other considerations. When state soci­ Some state societies have expressed the ety presidents do not submit any sugges­ view that they are not as well represented tions, the president of the Institute must in committee appointments as other soci­ rely on information he may obtain from eties no larger than themselves. other sources as to the availability of in­ It has been the policy for some years dividuals in various parts of the country to make committee appointments roughly to participate in the work of particular in proportion to the number of members of committees. the Institute in the several states. This The by-laws empower the president to policy has been adhered to in the current make all committee appointments, with year, although there are discrepancies due the exception of the board of examiners, to several other important considerations; the executive committee, the committee for example, individual qualifications for on professional ethics, and the commit­ the work of a particular committee, tee on nominations, whose members are familiarity with the subject matter, avail­ elected by the council, and, in the case ability to attend meetings, evidences of of the nominating committee, in part by interest or activity in the Institute’s work. the membership at large. The president Analysis of the committee appointments customarily consults other officers of the for the current year shows that the ratio Institute and submits a preliminary list Joel D. Harvey of committee appointments from New of appointments to the executive commit­ 2 The Certified Public Accountant tee for review and suggestions. There are were deeply impressed by the cordiality arate one city from another, and where at present 47 committees of the Institute, with which they were received, and by the relatively small number of certified the total membership of which includes the very active interest in the development public accountants presents exceptional some 500 Institute members. Practically of the profession and in the Institute’s difficulties in maintaining an active society every aspect of the work of the staff is activities which was manifested. It is dif­ or chapter. The progress which the pro­ under the general supervision of some ficult for practitioners in more populous fessional groups have made in places the committee. sections of the country to visualize the Institute’s officers visited, in spite of the problems of their professional colleagues difficulties which have confronted them, Southwestern Trip in those areas where industrial activity is particularly impressive. T. Dwight Williams, the new president is limited, where hundreds of miles sep- J. L. C. of the Institute, and the secretary attended four meetings of certified public account­ ants in the southwest early in November. The State Societies and The trip began at Tulsa, Oklahoma, where the annual meeting of the Okla­ homa Society was held November 2 and The Institute 3. Mr. Williams received congratulations At the meetings of the Institute’s coun­ the tax laws, in distribution of public in­ of his own state society on his election as cil and the Advisory Council of State formation pamphlets in the various com­ president of the national organization of Society Presidents, held at Chicago in munities, in the organization of a nation­ certified public accountants. He partici­ October, a proposed plan of coordination wide program for assistance to returning pated in the program as chairman of the of activities of state societies and the Insti­ veterans, etc. Oklahoma Society’s legislative committee, tute was approved, as noted in the No­ The principal advantages to be derived and led a discussion of legislative prob­ vember C e r tified P u b lic A c c o u n t a n t . from the adoption of a formal plan of lems, particularly the question whether This plan has been the subject of study coordination of activities of state and na­ regulatory accounting legislation would be by committees of the Institute and the tional organizations, and the creation of desirable in Oklahoma. This question Advisory Council of State Society Presi­ a state society service department in the will receive the active study of a commit­ dents for more than two years. As ap­ staff of the Institute, it is believed, will tee which has been requested to report proved, it provides in essence for the be to increase the scope and volume of back next spring. The Oklahoma Society creation of a department in the staff of cooperative activities, to refine the cooper­ meeting was well attended, and the pro­ the Institute to make a full-time job of the ative processes, to increase the frequency gram and discussion gave evidence of keen type of service to state societies which has of intercommunication, and, in short, to interest in all current professional prob­ been occupying an increasingly large part put cooperation on a day-to-day, rather lems. Particularly striking to the Institute’s of the time and attention of the officers than an intermittent, basis. As an ex­ office were the numerous allusions to and staff in the past ten years. ample of the possibilities of refining the the work of the American Institute of When the Advisory Council of State procedure to be followed in communicat­ Accountants in the various fields of activity Society Presidents was created by amend­ ing with state societies: Up until the discussed at the Oklahoma Society meet­ ment of the Institute’s by-laws in 1936, present, most communications from the ing; for example, cooperation with the bar, at the time of the merger of the American Institute have been addressed to the state refresher courses for returning veterans, Society of Certified Public Accountants society presidents. The volume of such accounting education, development of and the Institute, a program of closer co­ communications has on occasion been so accounting principles and auditing proce­ operation between the state and national great that state society presidents have dure, state legislation, and public relations. organizations was inaugurated. The re­ found it difficult to familiarize themselves A high degree of coordination of the sults have been gratifying. The Institute with the data received from the Institute activities of state and national organiza­ has served as a clearing house through and refer it to the appropriate committees tions apparently already exists, so far as which state society presidents have been for timely use. It is now proposed that the Oklahoma Society is concerned. kept informed of what other state societies the communications from the Institute From Oklahoma the Institute’s officers have been doing. The Institute has sent shall be addressed to the chairman of the proceeded to Albuquerque, New Mexico; special communications to state society appropriate state society committee, with Phoenix, Arizona; and El Paso, Texas, presidents on matters of particular impor­ a copy to the president for his informa­ three cities which had not been visited by tance. The Institute’s staff has assisted tion. This will involve more detail work official representatives of the Institute since state societies in securing speakers for in the Institute’s office, because of the before the war began. In one of these meetings, on request, and has cooperated necessity of keeping card records of all cities the meeting which had been organ­ closely in making plans and arrangements state society committee personnel up to ized to give the Institute’s officers an for all regional conferences since 1938. date, but it should greatly enhance the opportunity to become acquainted with the On the other hand, the state societies usefulness of the information which is local practitioners was the first called by have assisted the Institute in many ways; distributed. An example of possible in­ the state society in four years. In all for example, in advocacy of establishment crease in scope of cooperative activity is three places the president and secretary of a non-partisan commission to simplify evident in the field of providing speakers The Certified Public Accountant 3 for state society meetings. The regular and effectiveness of the plan in the various staff of the Institute could absorb only a 1946 ANNUAL MEETING states. limited amount of this kind of work: it “It should be understood that activities The executive committee, under could become a full-time job for an intel­ designed to attain these objectives can be authority of council, has made ar­ undertaken only to the extent possible ligent assistant if carried on to the full rangements for the 1946 annual possible extent. within the limitations of available funds meeting of the American Institute and personnel. No novel or startling results should be of Accountants to be held at the expected from the plan of coordination Waldorf-Astoria Hotel, New York, “It should also be clearly understood that the Institute’s co-ordination depart­ when it is put into operation in 1946. N. Y., September 19-22, in conjunc­ ment cannot undertake to render service The formal program provides for the tion with the New York State Society’s celebration of the 50th an­ direct to individual members of state gradual addition of one activity after an­ societies or to the public. Its function will other as personnel and finances permit. niversary of the enactment of the first CPA law in the United States. be confined to serving the state societies For the current year the Institute’s budget as such through their officers and com­ contains an appropriation of $5,000 for mittees.” state society service, plus provision for ing their functional procedures; to assist It is recognized that the administration traveling expenses for officers and staff to them in increasing their value to their of the plan will have to be flexible. There attend state society meetings. Up to the members, and to aid them to develop and is great diversity in the size of the respec­ present time it has not been possible to increase their influence in their respective tive state societies and consequently in secure additional staff personnel qualified communities. the scope of activities which they can to carry out the work to be performed. “4. To bring about a thorough and undertake, which in turn will have a Originally it was proposed that the state complete dissemination of professional direct bearing on the extent to which they societies contribute to the financing of the ethics throughout the entire country, both will desire service of the type which the plan, but it was concluded that it would to the practicing accountants and to the general public. This would tend equally Institute’s new department could render. be best for the Institute to assume the to strengthen the standards of the profes­ Statistics published in the October bulletin initial expense and to ask for financial sion of accountancy and its prestige in the show that two state societies have a aid from the state societies only if results country at large. thousand members or more, while twenty- justified expansion beyond the limit of “5. To furnish advice and assistance one societies have less than one hundred the Institute’s resources. to state societies on specific problems as members, and of this number thirteen The operation of the plan will be super­ requested. have less than fifty members. It seems vised this year by a committee composed of “6. To furnish to all state societies, in­ quite likely that the larger societies will not two members of the Institute’s executive sofar as may be practical, periodical Infor­ wish much assistance from an outside committee, the chairman of the Advisory mation covering developments in the field of taxation, accountancy, and related source in planning their meetings or secur­ Council of State Society Presidents, the matters. ing speakers, whereas many of the smaller immediate past chairman of the Advisory “7. Establish a speakers’ bureau through societies have indicated that they need this Council, and the chairman of the Advisory which the state societies could obtain com­ type of service more than any other. Council’s committee on coordination. petent speakers for their meetings. Larger societies, on the other hand, which Members are as follows: “8. To make available the facilities of maintain many active committees, may be the Institute to the state societies in plan­ more interested in integrating their activ­ J. William Hope, Connecticut, chairman ning their annual and regional meetings. Parry Barnes, Missouri “9. To assist state societies in providing ity programs with those of the Institute William H. Goldberg, Colorado means whereby younger members and than smaller societies which must limit the Joel D. Harvey, Massachusetts practitioners might secure the benefit of scope of their activities. C. F. Milledge, Texas the knowledge and experience of older While the launching of the plan of co­ practitioners. ordination of activities of state and national The immediate specific objectives of “10. To keep state societies fully in­ organizations will be wholly experimental, this new venture, as set forth in the re­ formed of governmental activities affecting it gives promise of contributing much to port adopted at Chicago, are as follows: the practice of accounting which come to the attention of the Institute. the accomplishment of one of the major “1. To develop and foster a closer “11. The Advisory Council’s committee objectives of the Institute, as set forth in friendship and cooperation among the on coordination to receive from the co­ Article I of its by-laws: “To unite the ac­ state societies, and between them and the ordination department of the Institute an countancy profession of the United States.” national organization. annual report covering all activities and It is recognition of the fact that state so­ “2. To coordinate the activities of the accomplishments of the year, in order that cieties of certified public accountants and state societies and the national organiza­ a full discussion can be had of all aspects the Institute are parts of one whole—the tion on specific projects in order to bring of the work when the Advisory Council profession of the certified public accountant the full power and influence of the profes­ meets. —and that the existence of the professional sion of accountancy to bear in the solution “12. The head of the Institute’s co­ of problems involving federal and state ordination department to be available to societies is justified only as convenient taxes, etc., relations with other organiza­ attend meetings of state societies to discuss instruments for the advancement of the tions, and the public at large. with them specific problems, and to assist profession in the larger interest of the “3. To assist state societies in improv- in improving the cooperative procedure general public. J. L. C. 4 The Certified Public Accountant

American Institute of Accountants. The Accounting Education committee has not yet developed the basic policies which will be observed in making State Society Committees to Assist (2) Construction of experimental forms the tests available for widespread use. Veterans of achievement tests. Dr. Wood presented a resume of the (3) Preparation of a suggested cumula­ The veterans committee of the District tive record for use by colleges co­ work of the project for Institute members of Columbia Institute of Certified Public operating in the testing program. who attended the recent meeting of coun­ Accountants has announced the formula­ cil in Chicago. Representatives of several A few additional Strong Interest tion of a program to aid veterans returning schools in the Middle West were invited Blanks have been scored for Institute from the armed services. An important to be present and were informed of the members. Some firms are beginning to feature of this program relates to employ­ part which schools would be invited to use the blanks in order to obtain infor­ ment of veterans returning to positions take. A cumulative record card has al­ mation on the vocational interests of ap­ with accounting firms, and to those seek­ ready been prepared on which the test plicants for positions. To facilitate the use ing employment in public accounting for results of each student would be shown in of the Strong Blank in appraising the the first time. such a way that his progress between the vocational interests of men who are con­ three levels of testing would be readily To assist local accounting firms in need sidering public accounting as a career, a apparent. The card also provides for other of additional employees, arrangements profile of the median interest scores of pertinent data, such as information relat­ have been made with the United States 1,000 public accountants has been added ing to personal qualities and interests. The Employment Service to act as a clearing to the regular report form. cooperative participation of colleges is house. The committee has furnished this There are 59 women among the 2,011 expected to extend over a five-year period. agency with specifications for positions public accountants who have filled out with public accounting firms. The speci­ the Strong Blank. The report states that T h o m a s W. L e l a n d , fications are general in form, and provide on the certified public accountant’s and Educational Director. an opportunity for prospective employers accountant’s scales the women have to state detailed job specifications. median interest scores only slightly lower than those of men. Although the group of SOCIAL SECURITY TAX Contemporary Accounting women is not large enough to warrant a RETURNS Proof that Contemporary Accounting definite conclusion, the results indicate Following is the text of a release filled a basic need of the profession for a that the Strong Blank for men should be received November 16 from the book presenting a review of the new de­ of considerable value in appraising the New York field office of the Social velopments in accounting, auditing, and vocational interests of women account­ Security Board: related subjects, is indicated by the many ants and of young women who are consid­ “ ‘Employer’s Application for orders received for copies. All of the 9,600 ering this profession. Identification Number,’ Form SS-4, copies of the first printing have been sold The test construction activities have used for registering employers for and the Institute has on hand additional been concerned mainly with the develop­ purposes of filing federal social se­ orders for approximately 1,000 copies, ment of the following types of tests for curity tax returns, was recently re­ vised by the Treasury Department. which cannot be filled until a second print­ experimental tryout in selected colleges: All Forms SS-4 dated prior to the ing has been completed. The Institute A. Orientation Test—an “aptitude” or revision of January 1945 are obso­ will continue to accept orders with the “general ability” test suitable for lete and should be destroyed. understanding that they will be filled in candidates and students at all levels. “When an obsolete Form SS-4 is chronological order. Every effort is being B. Accounting Achievement Test I—an used, it necessitates correspondence made to speed the second printing but, elementary accounting test suitable with employers to obtain the addi­ because of the difficulty in securing paper, for students at the end of the first tional information now required on it is expected that it will be some time in college course in accounting, and the new form. This, in turn, may February before new orders can be filled. for initial screening of candidates cause delay in the issuance of the for junior or subjunior positions in identification numbers and the re­ Committee on Selection of member firms. ceipt of the employers quarterly tax C. Accounting Achievement Test II—for blanks. Personnel college seniors who have completed “Accountants who assist employ­ Dr. Ben D. Wood, director of the re­ a major sequence in accounting, or ers in completing Forms SS-4 should search project in selection of personnel, the equivalent, and for candidates use only the January 1945 revision. for junior and higher positions. has submitted a quarterly report sum­ In this way, you can avoid unneces­ sary inconvenience to your clients marizing the activities of the project for It is expected that the initial use of these as well as to the government. The the period from July 15, 1945, to October tests will be limited to the experimental new Forms SS-4 can be obtained 15, 1945. The report emphasizes the fol­ purpose of test validation. After experi­ from any Social Security Board field lowing activities during the period: mental use, first editions of the test will office or at any office of the Collector ( 1) Further use of the Strong Interest be made available for general use of co­ of Internal Revenue.” Blank. operating colleges and members of the The Certified Public Accountant 5 New Members of Institute’s Council

Parry Barnes engaged in the practice of public accounting J. W illiam Hope for the past 25 years. A certified public ac­ Parry Barnes of countant of Indiana, he is a past president of j J. William Hope Kansas City, Mo., the Indiana Association of CPA’s and of the of Bridgeport, is a partner of Luns­ Indianapolis Chapter of NACA. He is also a Conn., is a partner ford, Barnes and member of the American Marketing Associa­ of J. William Hope Co. A member of tion, and was recently elected second vice & Company. He has the Institute since president of the Rotary Club of Indianapolis. been a member of 1924, he has been the Institute since a member of coun­ 1927 and has served cil for the past three Samuel W. Eskew on the council for years and of the ex­ the past three years. ecutive committee Samuel W. Eskew He has also been a for the past year. of Louisville, Ky., member of the ex­ He has also served is a partner of Cot­ ecutive committee, on other commit­ ton & Eskew. He the board of ex­ tees. Mr. Barnes entered the practice of pub­ has been associated aminers, the committee on nominations, and lic accounting in 1918. He is a certified with Mr. Cotton in a number of other committees. Mr. Hope has public accountant of Kansas, Missouri, Okla­ this firm since 1922. been in public accounting practice since 1920. homa, and New York, a past president of the A member of the He is a certified public accountant of Con­ Missouri Society of CPA’s, and a member Institute since 1926, necticut, a member of the Connecticut State of the Kansas and New York state societies. Mr. Eskew has Board of Accountancy, and a past president He is lecturer on federal taxation at the Uni­ served on the com­ of the Connecticut Society of CPA’s. versity of Kansas City. mittee on state legis­ lation for four years, the committee on Laurence O. Manley George O. Carlson federal taxation for two years, and the com­ mittee on cooperation with trade associations Laurence O. George O. Carl­ for two years. In 1910 he was admitted to the Manley of Wash­ son of Los Angeles, Kentucky State Bar and practiced law in ington, D. C., is a Calif., is resident Bards town for one year. A certified public partner of Wayne partner of Ernst & accountant of Kentucky, Mr. Eskew is a past Kendrick & Com­ Ernst. He became president of the Kentucky Society of Certified pany. He is a CPA associated with the Public Accountants. He is president of the of the District of firm in 1915 and es­ State Board of Accountancy of Kentucky, and Columbia, New tablished the Los a member of the National Association of Cost York, and North A ng eles office in Accountants. He is also a member of Local Carolina, and has 1923. In 1925 he was Board No. 74 of the Selective Service System, been in the prac­ admitted to partner­ a member of the Louisville Credit Men’s tice of public ac­ ship in the firm. Association, of the Louisville Board of Trade, counting since 1917. Mr. C a rlso n has and of the Louisville Convention and Public­ He became a mem­ been a member of ity League. ber of the Institute in 1921 and has served the Institute since 1935 and has served on the for three years as a member of the committee committee on cooperation with SEC. He was on natural business year. He is a graduate of born in Omaha, Nebraska, and was educated J. Hom er Hardy Bucknell University and of Pace Institute. in the public schools there. He is a certified public accountant of California and Texas. J. Homer Hardy is practicing public George E. Perrin accounting under Charlton N. Carter his own name in George E. Perrin Chattanooga, Tenn. of Greensboro, Charlton N . He became a mem­ North Carolina, is Carter of Indian­ ber of the Institute senior partner of apolis, Ind., a part­ in 1936 and has A. M. Pullen & Co., n e r o f Carter, served on the com­ having been associ­ Bailey, Kirlin and mittees on member­ ated with the firm Walker, became a ship and coopera­ since 1919. He be­ member of the In­ tion with bar asso­ came a member of stitute in 1938. He ciation. Mr. Hardy the Institute in 1935 is a graduate of the is a certified public and has been a Sheffield Scientific accountant of Tennessee and a member of member of the School of Yale Uni­ the Tennessee State Bar. He is a past presi­ board of examiners versity, with the de­ dent of the Tennessee Society of CPA’s and for six years, serv­ gree of Bachelor of of the Tennessee State Board of Accountancy, ing previously on the committees on member­ Philosophy, and is and was for three years a member of the ship, natural business year, and state legisla­ a member of the Yale University Chapter of Tennessee State Board of Examiners. He is a tion. A native of New York, Mr. Perrin has Sigma Xi, an honorary scientific society. Mr. member of the National Association of Cost been engaged in the practice of public ac­ Carter is a native of Indiana, and has been Accountants. counting for more than 25 years. He holds 6 The Certified Public Accountant the certified public accountant certificates of Richard C. Mounsey gan, New York, Ohio, and Pennsylvania. He North Carolina and Virginia, and has been is a past president of the Michigan Associa­ a member of the North Carolina State Board Richard C. tion of CPA’s and past chairman of the of Accountancy for the past ten years. Mounsey of Seattle, Advisory Council of State Society Presidents. Wash., has been a He received two degrees in engineering from member of the In­ Worcester Polytechnic Institute and attended Lincoln G. Kelly stitute since 1920, the Harvard Graduate School of Business and has served Administration. Lincoln G. Kelly three years on the of Salt Lake City, committee on mem­ Utah, is the senior bership and one Saul Levy year on the com­ and managing part­ Saul Levy of New ner of Lincoln G. mittee on coopera­ tion with credit York, N. Y., has Kelly and Com­ practiced public ac­ pany. He was ad­ men. Mr. Mounsey was born in Colum­ counting under his mitted to the Insti­ own name in New tute in 1919, and bus, Ohio, where he received his education. In 1917 he moved to Seattle, and was associ­ York since 1919. since that time has He joined the In­ served on many of ated with the accounting firm of E. G. Shor­ rock Company for three years. He became a stitute in 1924 and its committees. He in recent years has was a member of CPA of Washington in 1919, and in 1920 started his own accounting business, R. C. served on several of council, 1934-1939, its committees. He and vice president, 1939-1940. He has also Mounsey & Co. His son, also a certified public accountant, is a junior member of the firm. is a graduate of served on the nominating committee, the New York Univers­ board of examiners, and the committee on Mr. Mounsey is past president of the Wash­ ington Society of CPA’s. ity School of Com­ accounting procedure. A CPA of Utah and merce, Accounts, and Finance, and of the California, Mr. Kelly is a past president of Brooklyn Law School of St. Lawrence Uni­ the Utah Association of CPA’s, and a mem­ Raymond D. Willard versity. Mr. Levy is a CPA of New York ber of the Utah State Board of Examiners. Raymond D. Wil­ and New Jersey, and has been president and He is also a member of the Utah Bar and the director of the New York State Society of American Bar Association. Mr. Kelly served lard of Boston, Mass., is a partner CPA’s. In 1922 he was admitted to the bar in World War I with the rank of major, and of the State of New York, and has served in 1940 acted in an advisory capacity to Gen­ of Robert Douglas & Company, and many law firms in New York City as con­ eral Hartman in organizing the Auditing and sultant in accounting matters related to finan­ Accounting Branch Construction Division of has been a member of the Institute since cial litigations. He is the author of articles the Army in preparation for handling cost- dealing with legal aspects of accounting plus-a-fixed-fee contracts. 1920. He holds a BCS degree of work and the relationship between account­ Northeastern Uni­ ants and lawyers. During 1941 and 1942 he served as expert consultant in accounting and Cyril Talbot versity. Mr. Willard entered the practice legal matters to the Fiscal Division, Services Cyril Talbot of of public account­ of Supply, War Department. Chicago, Ill., a part­ ing in 1910 and be­ ner of Barrow, came a certified public accountant of Massa­ Wade, Guthrie & chusetts in 1919. He is a past vice president William H. Moberly Co., has been a of the Massachusetts Society of CPA’s. Mr. William H. Mo­ member of the In­ Willard has been president and director of berly of Wichita, stitute since 1930. the Concord Cooperative Bank since 1921. Kan., is a partner He is a member of He is the author of System Building and Con­ of Moberly and the committee on structive Accounting, and of various maga­ West. He has been accounting p ro ce ­ zine articles on related subjects. a member of the In­ dure, and has previ­ stitute since 1927 ously served on the Donald M. Russell and has served on committees on the committee on meetings and on co­ Donald M. Russell membership for the operation with bankers and other credit of Detroit, Mich., past six years. Mr. grantors. Mr. Talbot was graduated from the is a partner of Ly­ Moberly was born University of Michigan with a BA degree brand, Ross Bros. & in Kansas City, Mo., in 1917 and entered the practice of public Montgomery. He and attended the accounting in 1919. Early in 1925 he joined has been a member Kansas City School of Law. Following sev­ the New York office of his present firm. of the Institute since eral years in the accounting department of an Later that year he was sent to the Boston 1930, and has served oil company in Oklahoma, he entered the office as assistant manager and shortly there­ on a number of its practice of public accounting in Kansas City. after was made manager. He was admitted committees. Last In 1927 he went to Wichita as branch man­ to partnership in the firm in 1930 and trans­ year he was chair­ ager for Lunsford-Barnes and Company, and ferred to the Chicago office, where he has man of the com­ in 1938 entered partnership with Ivan M. been ever since. Mr. Talbot is a certified pub­ mittee on renegotia­ West. A certified public accountant of Mis­ lic accountant of Illinois, Iowa, Massachusetts, tion and termina­ souri and Kansas, Mr. Moberly is a past presi­ New York, Oklahoma, and Pennsylvania, and tion of war contracts. Mr. Russell has been dent of the Kansas Society of CPA’s, and was at the present time is vice president of the Illi­ in public accounting practice since 1919, and for three years member, secretary, and chair­ nois Society of Certified Public Accountants. holds the CPA certificates of Illinois, Michi­ man of the Kansas CPA Board of Examiners. The Certified Public Accountant 7

Lewis Lilly Lewis Lilly of San Francisco, Calif., is a Professional Ethics partner of McLaren, Goode & Co. Since be­ coming a member of the Institute in 1927, Directory Listings members of the Institute, and since some Mr. Lilly has been chairman or member of engineering services are of a character many of its committees. He is a graduate of Just prior to the publication of a new similar to those of some accounting ser­ the University of Wisconsin, and has taught telephone directory for Boston, the Massa­ accounting at the University of California vices, it was felt that there was a com­ and at the University of Washington. Mr. chusetts Society of CPA’s issued a notice petitive element in the situation, and that Lilly is a certified public accountant of Cali­ to its members calling attention to the the spirit of the Institute’s rule was not fornia and of New York. new Rule 10 of the Society’s Code of being observed.” Ethics (similar to Rule 10 of the Institute’s Edward J. Stegman Rules of Professional Conduct), which Certification of Unaudited Edward J. Steg­ prohibits the listings of names and ad­ Statements man of Baltimore, dresses of members or associates in direc­ Md., is a member tories in special type or in any other form of the firm of Steg­ Following is the Institute’s reply to a man, House & Co. which differentiates them from other recent inquiry from a member: Since becoming a names and addresses in the same list. member of the In­ Pittsburgh Chapter of the Pennsylvania “We . . . believe it to be the prevailing opinion that a CPA should not permit his stitute in 1920, Mr. Institute reports improvement in the mat­ Stegman has served name to be used in conjunction with on the committees ter of bold-type listings in the Pittsburgh financial statements prepared from books on meetings, state telephone directory. The 1945 directory without audit. We believe that statements legislation, develop­ contains only five such listings, whereas on auditing procedure make it even more ment of the Insti­ there were almost fifty in the 1944 issue. clear that an accountant should not give tute, and coopera­ a certificate on financial statements in tion with credit men. He is at present a mem­ part audited and in part not audited, even ber of the board of examiners. He is a certi­ Interpretation of Rule No. 15 with a qualification in the certificate cov­ fied public accountant of Maryland, and has been chairman of the Board of Examiners of To an inquiry from a member desiring ering the unaudited portion.” Public Accountants of Maryland for about clarification of the situations intended to fourteen years. Mr. Stegman lectured on ac­ be covered by Rule No. 15 of the Insti­ counting subjects at the South-Eastern Uni­ Financial Interest in Client’s Affairs versity in Washington and taught auditing tute’s Rules of Professional Conduct, the for ten years in the Evening Classes at the following reply was given: A member made the following inquiry Johns Hopkins University in Baltimore. “Rule No. 15 was designed to prevent regarding the interpretation of the term a member simultaneously engaged in the in Rule No. 13, “owns . . . a financial practice of public accounting and in an­ interest”: other activity from advertising or solicit­ PRACTICE BEFORE THE ing, or engaging in other practices pro­ “It has been the observation of the TAX COURT hibited by the Institute’s Rules of Pro­ writer while a field agent with the Inter­ fessional Conduct in conjunction with the nal Revenue Agent’s Office that account­ To a recent request from a member for other activity. Obviously, such a situation ants are, upon occasion, creditors of their information regarding the examination would be unfair to members practicing auditees, not as to fees owing, but for for practice before the Tax Court of the as public accountants and not engaging interest-bearing cash loans, either secured United States, the Institute’s office replied in other activity, which might permit their or evidenced by demand notes. Does such as follows: names to be brought to the attention of creditor status of the accountant meet the definition of ‘owns . . . a financial inter­ “The examination comprises the follow­ potential clients in a manner prohibited est?’ ” ing subjects: (1) rules of practice of the by the Institute’s rules. Court; (2) practice before the Court in­ “The particular case which gave rise After the committee on professional cluding the preparation of pleadings, mo­ to Rule No. 15, concerned a member of ethics had considered the question, the tions, briefs, etc.; (3) rules of evidence the Institute who was engaged in the Institute replied as follows: applicable in the Court; (4) principles practice of public accounting and the of legal ethics; (5) structure and history practice of engineering simultaneously as “Rule 13 applies as fully to a financial of the Internal Revenue Code as amended a partner of both firms. The committee interest in a loan, whether or not evi­ and the general subject of the revenue on professional ethics concluded that in denced by a note, as to ownership of laws and the interpretation placed thereon his capacity as a partner of the engineer­ capital stock, provided the financial in­ by the courts in leading cases; and (6) ing firm such member should not be per­ terest represented by the loan is substantial constitutional and general substantive law mitted to mail circulars in a manner con­ either in relation to the capital of the involving cases coming before the Court. trary to that prescribed in the Institute’s enterprise or personal fortune of the audi­ We have not been able to secure a Rule No. 10. tor. copy of any of the previous examinations “In this particular case the circulars of “The SEC has criticized accountants and are, therefore, not able to recommend the engineering firm found their way for lending money to a client, holding any specific texts which you might study into the hands of some of the clients of that such loans might impair the account­ in preparation for the examination.” practicing accountants who were also ant’s independence.” 8 The Certified Public Accountant

Association’s advance program announce­ Public Information ment included the following statement: “The American Management Associa­ Editors and others who receive assis­ Recognition of the American Institute tion is grateful to the American Institute tance from the American Institute and of Accountants assistance in presenting of Accountants for their cooperation in useful information about the accountancy needed accounting information to the the preparation of the material and the profession as its activities relate to major clinic groups has been given at each meet­ provision for participation in this panel.” public problems do not usually write in ing by Dr. Raymond W. Miller, president F r a n k A. G ale, to acknowledge this service. Press clip­ of the American Institute of Cooperation, Assistant Secretary. ping services, and an occasional letter, pro­ who in a recent letter to the Institute said: vide the only evidence ordinarily available “For many years, I have been in the that the public information program is field of public relations, and have had an reaching those it is intended to reach. opportunity to know many leaders in the COMMITTEE PERSONNEL profession and observe and study pro­ AP Comment grams and efforts of many companies, Accounting Procedure groups and individuals. I can say, un­ There have been three recent experi­ qualifiedly and without reservation, that George D. Bailey, chairman, Michigan ences, however, which show that men never in my experience have I encountered William H. Bell, New York who count recognize the value of Amer­ Henry T. Chamberlain, Illinois anything on a par with the public rela­ M. C. Conick, Pennsylvania ican Institute cooperation and take full tions work that the American Institute James L. Dohr, New York advantage of it in their work. One, a news of Accountants is accomplishing in these Marquis G. Eaton, Texas executive of the Associated Press bureau in series of meetings being held in various John Inglis, New York Chicago, acknowledging a release about parts of the nation.” Anson Herrick, California the recent meeting of council in Chicago, Paul K. Knight, New York In the letter, Dr. Miller recalls that Edward J. McDevitt, Jr., Massachusetts given to him over the telephone from the members of the American Institute have Warren W. Nissley, New York meeting press bureau at the Palmer House, been present at every cooperative clinic William A. Paton, Michigan said: Maurice E. Peloubet, New York held to date and have “participated in the Charles S. Rockey, Pennsylvania “While I’m on the phone, tell me who proceedings all day.” He adds: “It is Walter L. Schaffer, New York is the man in the American Institute office my opinion that this combined action of Harold B. Simpson, New York who sends out those Journal of Account­ your association and its members, as a Maurice H. Stans, Illinois Cyril Talbot, Illinois ancy editorials and committee reports and matter of practical public relations on the other items for the information of editors.” C. Oliver Wellington, New York part of your group, is unparalleled in Edwin H. Wagner, Jr., Missouri When told the material is sent out by any profession.” Edward B. Wilcox, Illinois the public information department to 398 Auditing Procedure editors of daily papers, the Associated AMA Meeting Press man said: Paul Grady, chairman, New York On the afternoon of December 7, at the “I want you to know that, as the man­ Fred J. Duncombe, Illinois Hotel New Yorker in New York, a full George P. Ellis, Illinois aging editor of an El Paso newspaper be­ Ira N. Frisbee, California fore coming here, I found that material session of the annual finance conference of the American Management Association David B. Galloway, Massachusetts interesting, and read every item received. Ralph H. Galpin, New York I can account for at least four editorials was given over to federal taxation, with a P. W. R. Glover, New York which we published with American Insti­ program that was conducted entirely by Carol F. Hall, New York tute of Accountants material as the infor­ members of the American Institute of Ac­ Alvin R. Jennings, New York mation source.” countants. The AMA asked the Institute Edward A. Kracke, New York Lewis Lilly, California Cooperative Clinics to accept full responsibility for organizing John A. Lindquist, New York the program and for securing the speakers. Frank Wilbur Main, Pennsylvania One other testimonial relates to that “We want only certified public account­ Charles H. Towns, New York broader phase of the public relations pro­ ants,” said the American Management gram devoted to relations of the profes­ Association executive who made the re­ Federal Taxation sion with national organizations in other quest, “to present the subject of taxes at Maurice Austin, chairman, New York fields. In recent months, Walter L. Brad­ this session.” This request was trans­ Thomas J. Dolan, Ohio ley, chairman of the Institute’s committee mitted to Maurice Austin, chairman of the Thomas J. Green, New York on cooperatives, has been appearing as a Charles Melvoin, Illinois committee on federal taxation. He ac­ Harry E. Howell, Rhode Island speaker and discussion leader at a series cepted responsibility for the program, and Troy G. Thurston, Indiana of cooperative clinics at which technical secured two members of this committee, W. Charles Butscher, Pennsylvania accounting problems have been discussed. Thomas J. Green and Mark E. Richardson, Russell S. Bock, California W. Waller Grogan, Kentucky The Institute office has sent clinic an­ as speakers. More than 150 financial and Edward K. Redfern, Pennsylvania nouncements to members of the profes­ accounting executives in industry heard Mark E. Richardson, New York sion in the areas concerned. this program. The American Management Paul D. Seghers, New York The Certified Public Accountant 9

Leland G. Sutherland, New York Saul Levy, New York Institute’s Purchasing Agent W. I. Nicholson, Jr., Oklahoma George Little, Missouri J. A. Phillips, Texas Ralph B. Mayo, Colorado Roy L. Pope, Texas State Legislation Louis A. Miazza, Mississippi J. A. Phillips, chairman, Texas William M. Russ, North Carolina Charles F. Coates, Connecticut Aubrey E. Swanson, Illinois James E. Hammond, California Clinton W. Bennett, Massachusetts George R. Drabenstadt, Pennsylvania Clarence H. Benton, Wisconsin Samuel W. Eskew, Kentucky Harry Boggs, Indiana William J. Carter, Georgia William H. Compton, New Jersey H. W. Gifford, Kansas Kenneth Cox, Wyoming Albert Moss, Washington William B. Finlay, Montana Lyle W. Hines, Minnesota Benjamin E. James, Florida Roland B. Keays, Michigan A. Frank Stewart, Virginia

Accounting Research

Committee Meetings “Responding to yours of November 9, there is no such thing as any single ap­ The meeting of the committee on ac­ proved method of making the computa­ counting procedure on December 4 and 5 tion to which you refer. was devoted to a consideration of the fol­ “May I suggest, however, as one pos­ James D. Bennett lowing matters: accounting for expenses sible method, that the tax be computed by James D. Bennett came to the Institute as and losses allocable to the war period, annualizing the income in accordance with office boy nearly 25 years ago. He has served accounting for fully amortized emergency the method provided in Section 47(c) in various capacities, including shipping facilities having substantial usefulness and and 711(a) (3)(A) of the Code, comput­ clerk, subscription clerk, and head of the ing the tax on the annualized income as value, quasi-reorganizations, SEC’s Ac­ book store at 135 Cedar Street. He is now if it were the actual income for the year purchasing agent for the Institute and The counting Series Release No. 53, and in­ ended May 31, 1946, and then taking, for Journal of Accountancy, and has charge of ventory pricing. your purpose, a proportionate part, i.e., the subscription and prospect lists, and of The agenda for the December 14 meet­ one-half, of the figure thus arrived at.” the mailing and shipping departments. ing of the committee on auditing proce­ dure was prepared to provide a con­ Accounting Series Release No. 53 OFFICERS AND STAFF sideration of: Revision of the pamphlet, T. Dwight Williams, president of the The opinion of the Securities and Ex­ Examination of Financial Statements, the Institute; Carman G. Blough, director of change Commission regarding “Charges terminology of the accountant’s certificate, research; and Thomas W. Leland, educa­ in Lieu of Income Taxes” and “Provisions the finality of financial statements, the tional director, were speakers at the North for Income Taxes” in the profit-and-loss Carolina Association’s Sixth Annual Sym­ “surprise” element in auditing procedure, statement is presented in its Accounting and independence of accountants. posium on Accounting and Taxation at Series Release No. 53, issued November Chapel Hill, November 29-30. 16, 1945. A review of the release will ap­ Tax Accrual for Interim Statements John L. Carey, secretary of the Institute, pear in the Official Decisions and Releases was made an honorary member of the The current interest in the problem of section of an early issue of The Journal Kansas Society of Certified Public Account­ determining accruals of federal income of Accountancy. taxes under the Revenue Act of 1945 is ants by vote of the members of the Society evidenced by a recent inquiry: Subcommittee on Mining at a meeting on October 5. Accounting On November 28, Frank A. Gale, as­ “The Revenue Act of 1945, having elim­ sistant secretary, attended a meeting at inated the corporation excess-profits tax The previous report of the appointment Hanford, Conn., to consider plans for the for the year 1946, has provided that the of a subcommittee on mining accounting tax shall be computed under Section New England States Accounting Confer­ improperly listed the Institute members ence to be sponsored early in 1946 by the 131 (b) for fiscal years ending in 1946. who were to serve with representatives “We would appreciate an expression of Connecticut Society of CPA’s. of the committee on accounting proce­ opinion as to the approved method of Paul J. Graber, research assistant, at­ computing a provision for federal taxes dure. The subcommittee’s roster includes: tended a meeting of the Philadelphia to be used in connection with the prepara­ Maurice E. Peloubet and C. Oliver Well­ Chapter of the Pennsylvania Institute of tion of an interim statement as at Novem­ ington of the committee, and Edward G. CPA’s on November 27, as a representa­ ber 30, 1945, for a corporation having a Carson, Henry B. Fernald and Thomas tive of the American Institute of Account­ fiscal year ending May 31, 1946.” A. Mackenzie of the Institute. ants research department, to report the The reply, prepared by the chairman of C a r m a n G. B l o u g h , Chapter’s panel discussion of the subject the committee on federal taxation, stated: Director of Research. of accelerated amortization. 10 The Certified Public Accountant

A. J. Leonard of Philadelphia, Pa., is presi­ What the Members Are Doing dent of the Main Line Kiwanis Club. C. F. Milledge of Houston, Texas, is Citations for the Legion of Merit material significance to the logistics pro­ secretary-treasurer and director of the Sales­ gram of the Army Air Forces.” manship Club of Houston. Colonel Morris C. Troper and Lt. Colo­ nel Oliver May have recently been Lloyd Morey, controller and professor of awarded the Legion of Merit, with the Public Service accounting at the University of Illinois, has made surveys of business organizations and following citations: procedure in state institutions of higher edu­ “Colonel Morris Carlton Troper, Herbert S. Ackerman of Ridgewood, N. J., since his retirement from active public ac­ cation in the states of Alabama, Mississippi, 0902843, Finance Department, Army of counting practice, has compiled a number of and West Virginia during the past year. the United States, rendered outstanding genealogies, which have been purchased by Clayton J. Schlosser of Alton, Ill., is presi­ service during the period 16 April 1942 many libraries, including the Library of Con­ dent of the Rotary Club of Alton. to 1 September 1945 as Chief of the Cost gress, Library of New York State, and New Analysis Section, and later of the Reports York City Library. Daniel M. Sheehan of St. Louis, Mo., is Section, of the Fiscal Division, Headquar­ national director and vice president of the ters, Services of Supply, and as Chief of E. D. Adams of Knoxville, Tenn, is presi­ Controllers Institute of America. the Coordination and Reports Branch, dent of the Knoxville Civitan Club. Office of the Fiscal Director, Headquar­ John V. Bowser of Wilmerding, Pa., is a Firm Announcement ters, Army Service Forces. In these as­ member of the Finance Committee of the M cL aren, G o o d e & Co. and W hite & signments Colonel Troper was charged United States Chamber of Commerce. with many and varied responsibilities. In C urrie announce that the practice con­ ducted heretofore in Seattle under the his effective discharge of these he devel­ William J. Christian of Birmingham, Ala., firm name and style of White & Currie oped fiscal reports; supervised W ar De­ is a member of the Birmingham Board of partment civilian payroll procedures; con­ Education. Mr. Christian also holds office in will be conducted hereafter in the firm many civic, social, and fraternal organiza­ name and style of McLaren, Goode & Co. ducted management studies and main­ tions in Birmingham. The resident partners will be R. D. W hite tained public relations. His cumulative and J. D. Currie. accomplishments contributed, in great Andrew G. Clauson, Jr., of West New measure, to the successful development of Brighton, N. Y., is a member of the Board the fiscal policies for the Army and War of Education of the City of New York, rep­ Department. Throughout this tour of resenting the Borough of Richmond. Mr. MEMBER'S SON DECORATED duty Colonel Troper demonstrated un­ Clauson is also a member of many boards and Arthur E. Ross, Staff Sergeant in the limited resourcefulness in devising plans committees having to do with education and Army, and son of Louis H. Rosoff of New and programs to meet varying needs and social work in Staten Island. York, has been decorated with the Purple his devotion to duty was in the finest tra­ Norman C. Cross has been appointed to Heart and Oak Leaf Cluster, and a Bronze dition of the Service.” the City Planning Commission by the Mayor Star. Mr. Rosoff’s other son, Richard C. and City Commission of Tulsa, Okla., to Ross, is serving in the Navy. serve for a three-year term. This is a twelve- “Lt. Colonel Oliver May, 0-901855, member Commission to pass on and make Army of the United States. For excep­ recommendation to the City Commission ACCOUNTANTS NEEDED FOR tionally meritorious conduct in the per­ with respect to city planning, zoning, loca­ ARMY PXs IN EUROPE formance of outstanding services from 14 tion of streets and transportation lines, and April 1942 to 3 September 1945. During other related matters. Twenty experienced male accountants this period Colonel May was on duty with are urgently needed by the Army to work M. T. Deaton of Pocatello, Idaho, is vice in PXs serving American troops in France, the Army Air Forces and was responsible president of the Pocatello Chamber of Com­ for the solution of financial problems and merce, and president of the Pocatello Shrine Belgium, and Germany. Salaries will be the establishment of financial policies and Club. based on the applicant’s experience, but procedures of major scope and impor­ none will be less than $300 a month. tance. His accomplishments include de­ Eric A. Frederikson of Washington, D. C., Transportation will be provided by the has been elected to the Board of Directors of termination of valuation of British air­ Army and employees will be furnished craft, important contributions to the the Retail Credit Association in Washington. quarters and food. Applicants will be planning and direction of the renegotia­ B. H. Hughes of Beaumont, Texas, is tion of contracts, preparation of plans employed for one year, although the con­ president of the Beaumont Rotary Club, and tract may be extended if the accountant used in the Army Air Forces in determin­ member of the board of directors of Trinity- ing funds required for procurement of Neches Council of Boy Scouts of America, desires and conditions warrant longer ser­ materiel, comprehensive reports on mate­ and of the local chapter of the American Red vice. riel, demobilization and other subjects Cross. Experience in accounting is desirable, which were required for presentation to but not a requisite. Graduates of business Dr. Joseph J. Klein is one of the five re­ Congressional committees, and the direc­ schools and men with degrees in account­ tion of the installation within the Army cipients of this year’s Townsend Harris medal, awarded by the City College Associate ing from qualified colleges and universi­ Air Forces of progress reporting on the Alumni to graduates of the College for “no­ ties will be accepted. Applicants should status of termination claims. On all his table post-graduate attainments.” Presentation get in touch with the Civilian Personnel duties he has displayed unusual leader­ of the medals, a practice started in 1933, was ship, foresight, initiative and professional made at the 65th annual dinner of the asso­ Office, Army Exchange Service, 25 West ability. His contributions have been of ciation on November 17. 43rd Street, New York City. The Certified Public Accountant 11 The Voice of the Membership

Comments on the New Certified than 50 years hence, almost surely some for the shells of five or six buildings re­ Public Accountant persons will use it in the future and the maining. We circled very low over the suggestions here offered will facilitate ref­ city, but I could see little rubble, nor did H arold A . E p p st o n , N e w a r k , N . J.: erence. I see any bomb crater. Everything was T h e C e r tifie d P u b lic A c c o u n ta n t has just completely flat. The outskirts, many now become a potent and necessary in­ Assignment in Tokyo miles from the downtown area had houses strument for administrative guidance to standing, but the center of the town was state society officers. Good work! I believe I am one of the very few In­ completely wiped out. Gordon Ford, Louisville, Ky.: stitute members or associates to be sta­ Many other Jap cities could be seen to We were pleased to receive the new tioned in Japan. I am with the 150th have been heavily damaged, but that was October issue of T h e C e r tifie d P u b lic Finance Disbursing Section, and at pres­ by innumerable bombings by many planes. A c c o u n t a n t . The format is nice and it is ent attached to the 8th Army Base Finance Tokyo itself must be at least 60 per cent full of interesting information. The fact Office. Due to the fact that so many per­ destroyed. In Yokohama the only build­ that T h e C er tifie d P u b lic A c c o u n ta n t sonnel are going home on points, there ings left are in the former International is being used as a medium for discussion is a shortage of help in the office, and con­ Settlement, where we are at present lo­ of affairs that might not be appropriate sequently we are continually searching cated. The rest of the city, outside of the to be discussed in The Journal is a very the locator cards for persons trained in docks, has been completely devastated, good idea. You are to be congratulated accounting or finance. So far we have mainly by fire bombs. for this revision. found none here. The finance work here, though busy, My trip to Tokyo from Manila proved is not difficult. It does not take an ac­ Jno C. M cNeil, W heelwright, Ky.: to be very interesting. After a 38-day water countant to do the job, so now with the I like the format of T h e C e r tified trip from Marseille, France, I landed in war over I am looking forward to resum­ P u b lic A c c o u n t a n t . I believe news of Manila, P. I., where I waited for the ar­ ing my work in the accounting profession. new connections, partnerships, etc., would rival of unit equipment for some 30 days. I feel, like so many other accountants, be of interest to the members and I’d sug­ My outfit, meantime, sailed for Yokohama. that I could be more useful to industry gest they be published. When the equipment finally did arrive I and myself by being just plain Mr. left with it by plane to rejoin the or­ Civilian. Jam es Q . R o nald, S ea ttle, W a sh .: ganization. CWO W il l ia m N. A n sp a c h Congratulations on your expanded C er­ Due to bad weather I was able to do tified P u b lic A c c o u n t a n t . The oppor­ a good bit of sightseeing. We were forced Bureau Examination of Working tunity to express their views will be ap­ Papers preciated by many of the members and to make several landings along the way at Laoag in the Philippines, Nahu Oki­ it is a pleasure to be able to get more news In reading the October issue of T h e nawa, Kinoya on Kyushu Island, and final­ of our profession. C er tifie d P u b lic A c c o u n t a n t , I was very ly in Tokyo. We were grounded for two much interested in the article on “Bureau Norman E. W ebster, New York, N . Y.: days at Kinoya, so we utilized this time Examination of Working Papers.” I have I like the increase in the amount and to explore some underground airplane factories and caves. There had been very recently had the same experience and feel variety of the content of the new C e r t i­ few, if any, Americans ahead of us in that the accountant’s working papers fied Public Accountant, even though to me some parts of it are less interesting some of the caves, and some of the vil­ should unquestionably be confidential and than others. And I like the illustrations. lages that we went through. We noted should be privileged. It is my opinion that I am very sorry that the size of the page several reactions amongst the Japs. The something should be done to remedy this youngsters would run and hide, and many was changed but realize that you under­ situation since the accountant is very fre­ would cry. Several dropped whatever stand the need for that much better than quently the confidant of his client and, they were carrying. The older kids stayed I do. So far as I know the size of The and saluted smartly and tried very hard furthermore, if the information given to Accountant, London, is the same as it was the accountant is open to the public or to in 1876. to force a grin. The adults all bowed very formally. examination by the Bureau of Internal But I do not find any identification of Although all surface installations had Revenue, many clients will not lay bare the issue except the date on the first page. been heavily bombed there was no dam­ all the facts in many instances. Should there not be consideration of this age whatsoever to the underground fac­ matter? The CPA of the American So­ Since certain states give privileges to tories that I saw. They had, however, accountants, why shouldn’t the federal ciety 1922-1936 is Vol. 1-16 and that of been stripped of their products. We did Bureau of Internal Revenue? Institute 1937-1945 (September) is see many planes, so undoubtedly the Japs Vol. 17-25 (No. 9). Since the October is­ did have a large reserve of planes to The agents of the Bureau of Internal sue cannot be bound with the earlier is­ thwart an invasion. Revenue frequently ask our assistance and sues of 1945 I suggest that the October From Kinoya we flew to Tokyo, but expect our cooperation but do not respect issue be called No. 1 of Vol. 26 and that detoured to fly over Hiroshima which was our inherent rights. M. L T racy Vol. 26 include 15 issues to December the city that first felt the Atom bomb. Newark, N. J. 1946. Also that the paging be continuous As publicized by the papers, the damage through each volume. done was incredible indeed. The center N o te.—Views of other readers on this sub­ While more readers will use it now of the city was completely level, except ject would be welcome.—Editor. 12 The Certified Public Accountant

COMMITTEE MEETINGS Michigan Tennessee The executive committee met at the *John J. Hewitt, Detroit *James L. Dallas, Memphis Edlore J. LaFreniere, Marquette Grover A. Bass, Memphis office of the Institute November 27. *Robert J. Michaels, Marquette Texas Present: T. Dwight Williams, chairman, *Charles M. Miller, Detroit Homer N. Sweet, Earl A. Waldo, Parry *Gilbert L. Bright, Dallas *Chester F. Weaver, Midland *Lee Ella Costello, Houston Barnes, Samuel J. Broad, Percival F. Missouri Emmett B. Day, Houston Brundage, J. William Hope, Edward A. *Charles H. Draper, Houston Kracke, Jackson W. Smart, J. Harold James J. Anders, St. Louis *Alpheus C. Armstrong, Kansas City *Arthur J. Dowling, Amarillo Stewart; John L. Carey, secretary. *Tilford M. Bredine, Kansas City *William B. Ferguson, Houston The committee on publication met at Henry V. Boehl, St. Louis *John P. Kinney, Corpus Christi the Union League Club in New York, Virgil S. Chandler, Kansas City *Lucille Rorex, Fort Worth *David Straiton, Fort Worth November 30. Present: Frederick H. *Patrick J. Dowd, St. Louis Hurdman, chairman, Percy R. Everett, George P. Eiswirth, St. Louis Virginia *Fred C. Livesay, Kansas City J. R. Hanna, Harry E. Howell, Mark E. *W. Brooks George, Richmond Warren J. McPhail, Kansas City *George F. Helfert, Jr., Richmond Richardson; Maurice E. Peloubet, trea­ *Edwin A. Paradoski, St. Louis W ashington surer; John L. Carey, secretary, and Rob­ John T. Plunkert, St. Louis ert M. Mears, assistant editor. *George O. Nelson, Seattle Nebraska *Harry E. Shull, Tacoma MEMBERS AND ASSOCIATES *Clarke Adams, Omaha West Virginia *Robert W. Johnson, Omaha ELECTED NOVEMBER 30, 1945 Milton Gessner, Wheeling New Jersey Joseph Rosenthal, Charleston California Max Gottlieb, Passaic W isconsin *Eugene T. Ageno, Los Angeles *Francis A. Krause, Waterloo *Fletcher Barker, Los Angeles New York *Alfred B. Abraham, New York Lincoln F. Race, Green Bay Leroy H. Cole, San Francisco *Chester E. Rubringer, Milwaukee Howard W. Finney, Los Angeles John M. Addison, New York Gerald M. Johnson, Sacramento *William G. Corey, New York W yoming *John W. Kennedy, Los Angeles Mark I. Fleischer, New York *Clara Raab, Casper *F. N. McClelland, Los Angeles †Harry R. Hall, New York Puerto Rico Ferd C. Harwood, New York *Juan A. Gil, San Juan Colorado William W. Heberling, New York Charles A. Zarini, Denver *Leo Hyman, New York *Admitted as associates. †Advanced to membership. Connecticut *George Jaffe, New York Arthur M. St. Germain, Hartford *James J. Lyons, New York *John G. Quinn, New York District of Columbia *E. Allan Reinhardt, New York UNUSUAL CERTIFICATE *Samuel H. Cohen, Washington *Leon Richman, New York According to an item in the New Illinois *Bernard Rosenthal, New York York Times of November 29, on the Franklin W. Rutherford, New York *Roland Butow, Chicago strike against Montgomery Ward & Co., Louis Siegel, New York †Lowell C. Doak, Chicago by the United Retail and Wholesale De­ Fred Elliott, Chicago North Carolina Earle F. Erion, Chicago *W. Roy Brookbank, Winston-Salem partment Store Employees Union, CIO, *Thomas F. Hawkins, Chicago *David Kittner, Elizabeth City “the company made public an accounting Joseph A. Kovac, Chicago Frank P. Wall, Raleigh firm’s certified statement that,” although Leon T. Newman, Chicago Ohio picketing continued at Ward’s Chicago *John Fisk Palmer, Chicago Marion A. Frye, Cleveland plants, “more than 70 per cent of all full­ Joseph M. Seamon, Peoria William W. Jones, Dayton time Chicago employees who would nor­ *Garnet S. Sharp, Chicago *Ross W. McPherson, Cleveland *Jack T. Szold, Peoria *Robert B. Mertie, Toledo mally be at work were at work yesterday Theodore F. Thulstrup, Chicago Harold M. Nichols, Cleveland morning [Nov. 27].” *Samuel N. Zagaria, Chicago *Morton I. Soss, Cleveland Indiana *George R. Zeiger, Cleveland RESEARCH ROOM OPEN TO *John E. Brown, Indianapolis Oklahoma PUBLIC Millard C. King, Indianapolis Judson L. Bailey, Tulsa The industrial statistics branch of the Cecil J. Kistler, South Bend A. L. Breneman, Tulsa Civilian Production Administration (for­ *Robert E. Groth, Oklahoma City Kansas merly the War Production Board) in *Oliver J. Selfridge, Wichita *Justin E. Vogt, Oklahoma City Washington, D. C., has opened its re­ Kentucky Oregon *G. Dale Belford, Portland search room to the general public Novem­ *Clement F. Schildt, Louisville ber 19—December 28, 1945. In this room, *Ulysses S. Whalin, Louisville Pennsylvania Samuel K. Allen, Philadelphia open from 9:00 AM to 5:00 PM, Monday- Louisiana *James F. Bisset, Pittsburgh Friday, have been assembled blank copies *William F. Hoerner, New Orleans Duncan Bruce, Pittsburgh of every application and report form is­ Massachusetts Louis H. Hass, Philadelphia sued by WPB and predecessor agen­ Thomas N. Herreid, Pittsburgh Rae D. Anderson, Boston cies. Also copies have been assembled of *Norman Barraclough, Boston Paul S. Linsley, Pittsburgh *Charles F. Fenn, Boston *Milton B. Rose, Philadelphia published tabulations based on data sup­ The Certified Public Accountant 13 plied on the application and statistical re­ M assachusetts CORRECTION porting forms filed during the past four Chairman—Donald P. Perry, Boston Information has just been received Secretary—Arthur W. Yardley, Boston years, and supplementary information in­ that two corrections should be made George S. Ferngold, Boston dicating the extent to which other data in the figures for the State of Wash­ George T. Finnegan, Boston have been tabulated and not published, ington as shown in the “Analysis of Stanley G. H. Fitch, Boston estimates of coverage, etc. In accordance Membership in Professional Societies M ich igan with the established practice of the WPB of Certified Public Accountants,” Chairman—Frank E. Seidman, Grand which appeared on page 16 of the Rapids concerning the confidential nature of in­ Vice-chairman—Arnold L. Barrett, Detroit dividual returns, however, no report or October issue of this bulletin. The Secretary—Ernest H. Fletcher, Detroit application to WPB executed by an in­ total state society membership for John J. Sloan, Counsel, Detroit dividual firm is available for examination. Washington is 359, instead of 228, Harry F. Kelly, Governor, Lansing and the per cent of total in the New Jersey (reappointed) Washington Society is 79.4, instead President—Joseph Thieberg, Paterson MEETING OF THE ASSOCIATION of 50.4. Secretary—Joseph J. Seaman, Perth Amboy OF CERTIFIED PUBLIC Treasurer—Julius E. Flink, Newark tion believes it to be desirable and prac­ Rhode Island ACCOUNTANT EXAMINERS Chairman—Edward C. Daley, Providence ticable to give consideration to the The Association of Certified Public Ac­ Treasurer—Russell C. Harrington, Provi­ individual applications of World War II dence countant Examiners met in Chicago on veterans for the purpose of extending Secretary—William B. M. Miller, Provi­ Tuesday, October 23, with Lewis Lilly assistance to such applicants in their prepa­ dence of California presiding. Twenty state ration to practice public accountancy as W yom in g boards and the board of examiners of the certified public accountants.” President—Kenneth Cox, Sheridan American Institute of Accountants: were Vice-President—Thomas E. Elliott, Rock A second resolution adopted at the Springs represented at the meeting. meeting urged state boards to accept re­ Secretary-Treasurer—Karl B. Axt, The Association, after full discussion sponsibility for the preparation of exami­ Cheyenne of the purposes of educational and experi­ nation statistics with respect to the educa­ P u e r to Rico President—J. E. Soltero ence standards of the state accountancy tional and experience requirements of acts and their application to returning Treasurer—Joaquin Villamil candidates for the certificate and the Secretary—B. Rosas Hernandez Veterans, adopted the following resolution: examination results in their respective juris­ William Waymouth “W h ereas some state boards have in­ dictions. Ramon Umpierre formed this Association that they have Other subjects considered were state been asked to relax the examination legislation and examinations for the certi­ STATE SOCIETY ACTIVITIES and/or experience requirements for World fied public accountant certificate. Weekly Meetings War II veterans who may wish to obtain The following officers were elected for CPA certificates; and the new fiscal year: Weekly meetings have been found help­ “W h ereas the fundamental purpose of ful by a number of state society groups. President—Walter N. Dean, New York, all laws regulating entrance into the pro­ At the Colorado Society’s informal weekly fessions is that of the protection of the N. Y. luncheon meetings in Denver, sponsored First Vice-President—James I. Keller, Jr., public interest; and by the education committee, there are dis­ “W h ereas this Association recognizes Miami, Fla. cussions of various phases of taxation with that the professional obligations of certi­ Second Vice-President—J. William Hope, actual experiences frequently cited. The fied public accountants are first to the Bridgeport, Conn. Seattle Chapter of the Washington So­ public, secondly to their clients; and only Secretary-Treasurer—Louis J. Muehle, Des thirdly to the other members of their pro­ ciety has organized a CPA Toastmasters Moines, Iowa. fession; and Club for weekly practice in public speak­ “W hereas the state boards have the of­ Lewis Lilly, as immediate past president, ing and discussion of problems of the pro­ ficial as well as the professional obligation will continue to serve as a member of the fession. The Oklahoma City and Tulsa of acting only in the public interest; and executive committee of the Association. Chapters of the Oklahoma Society also “W h ereas it appears that the number hold weekly luncheon meetings at which of veterans who may wish to become RECENTLY APPOINTED STATE CPA’s may be only a minor fraction of BOARDS OF ACCOUNTANCY members assigned to the task present brief reports on matters of current interest as the total number of veterans, while all or A rkansas many of the others may be of that public President—R. A . Lile, Little Rock a basis for discussion by the group. whose interest the profession is obligated Secretary—Walter F. Theis, Pine Bluff to serve: Treasurer—Ralph Cotham, Little Rock Taxes: Symposia, Clinics, and “R esolved that the Association of Cer­ K ansas Panel Discussions Chairman—W. F. Hardesty, Topeka tified Public Accountant Examiners rec­ News of varied methods of keeping up ommends to all state boards that they do Secretary—C. L. Coe, Salina Fred B. Kubik, Wichita to date on the intricacies of current tax not relax the education, examination or North Dakota experience requirements for the CPA cer­ problems has come to the Institute’s office President—William M. Schantz, Bismarck from state societies. The lecture and study tificate or for the practice of certified Secretary-Treasurer—Mrs. Helen Larsgaard, public accountancy; and Dickinson group and the taxation committee of the “F u r th er R esolved that this Associa- L. A. Harvey, Grand Forks Louisiana Society of CPA’s hold regular 14 The Certified Public Accountant

symposia at which recent court decisions in tax matters are discussed. The District The Members Say . . . of Columbia Institute of CPA’s collabo­ rated with the American University in an Economics a Prerequisite for CPA counting and auditing practice to the two Certificate Institute committees [accounting proce­ institute on federal taxes, “to serve the In presenting the Elijah Watt Sells gold dure and auditing procedure], to the needs of advanced practitioners, tax law­ Securities and Exchange Commission, or medal to Norman G. Currin for excellence yers, and tax accountants by discussing cur­ to others. We must take it upon ourselves in the November 1944 CPA examinations, rent controversial subjects on an advanced to find some way of getting broader dis­ level.” Several state societies, including on the occasion of the Twentieth Annual cussion of these questions in advance of those of New Jersey and New York, and Conference of the Michigan Association their promulgation. . . . Jacksonville Chapter of the Florida Insti­ of CPA’s November 10, Frank E. Seid­ “Effective work also can be done by tute, are sponsoring tax clinics or series of man, chairman of the Michigan State the professional society on behalf of its lecture and discussion meetings for the Board of Accountancy, made the follow­ members by arranging for consultation with purpose of discussing tax problems “that ing remarks: state officials or departments who prescribe confront the accountant and the average “There is little question but that ac­ rules and regulations affecting the account­ businessman.” Prominent tax specialists and counting has made great strides in the last ant’s work, such as the bank commissioner, government officials are frequently invited twenty-five years. There is one field, how­ the state tax department, etc. The Institute to speak at these meetings, and question ever, in which I feel the profession has has done a great deal along these lines in cooperation with the Securities and Ex­ and answer sessions sometimes constitute not progressed nearly as much as it change Commission and its staff.” a part of the meetings. The Connecticut should, and that is in the field of eco­ nomics in its relationship to accounting. Society recently presented a panel discus­ Just Simple Taxes? There are few states in the Union that sion embracing the Tax Adjustment Act require a knowledge of Economics as a William J. Carter of Atlanta, Ga., who of 1945, before the members of the Hart­ prerequisite for the CPA certificate. I am is vice president of the NACA, in a recent ford Control of the Controllers Institute of glad to say that the State of Michigan is address at New Orleans discussed “The America. not among these laggards. Trend of Federal Taxation” from the Civil “Not only are numerous states back­ War period down to the postwar tax plans Lecture Course on Auditing ward in that regard but the American of today. Following are excerpts from his. Institute examination itself does not in­ Annual lecture courses sponsored by talk: the Minnesota Society and held on the clude a paper in Economics. I think this is a definite shortcoming. In that regard “History has proven that there never campus of the University of Minnesota I don’t mind telling you that as a member was a perfect tax and never will be. The have proved beneficial to many accountants of the Michigan CPA Board I invariably moralist calls for just taxes, but taxes in Minnesota for several years past. Such have pangs of conscience when I vote to cannot be just. The administrator and the courses give younger members of the pro­ grant a Michigan certificate to a holder of taxpayers ask for simple taxes, but ex­ fession intensive, practical instruction and a certificate of another state which uses perience shows and will continue to serve as a refresher course for more ex­ the Institute examination but which does demonstrate under our latest attempt at perienced accountants. not supplement it by a paper in Economics simplification that taxes cannot simply be as does Michigan.” simple. The businessman demands prac­ tical taxes, but financial history proves LOS ANGELES CPA's AID Effective Work of a State Society that it is impracticable to make them VETERANS PROGRAM Joel D. Harvey, president of the Massa­ merely practical. Exact justice can never Los Angeles certified public accountants chusetts Society of CPA’s, speaking at a be attained, and paradoxical as it may are cooperating with the Harvard Business recent meeting of the Rhode Island Society seem many of the most simple taxes are School Club of Los Angeles in advising on the work of the state society, made the unfair, unjust, and sometimes purely and placing veterans interested in public following remarks: arbitrary in their application. On the other accounting who attended the Harvard hand, some of the most just and fair “Perhaps the most fertile field for accom­ taxes are the most complex in form. . . . Graduate School of Business Administra­ plishment by group action lies in con­ “I am personally of the opinion that tion. This is part of a nation-wide pro­ tinued and increased self-education of Congress should act upon the recom­ gram of the Harvard Business School and members acting jointly through their so­ mendation of the American Institute of Alumni to aid returning veterans. cieties to advance the science of account­ Accountants and set up a non-partisan tax Members of the Institute who have staff ancy. Great strides have been made in commission to make a thorough study of openings for men of this type can aid this recent years in the elucidating and record­ the science of taxation as it applies to all program by contacting the local Harvard ing of basic concepts of accounting. Every branches of government, both national Business School Club in their city or by accountant in public practice should be­ and state. Several bills have been intro­ addressing the Harvard Business School, come familiar with Chapter 1 of Contem­ duced in Congress for such action but all porary Accounting, a Refresher Course for Soldiers Field, Boston, Mass. of them have been lost in the shuffle. Public Accountants, recently published by Congress could do no one thing of greater In Los Angeles, requests should be di­ the American Institute of Accountants.. . . importance to assure economic stability rected to Carl N. Mather, Jr., in care of “It will be unfortunate if most of us sit than to create a qualified commission to F. W. Lafrentz & Co., 740 South Broad­ back and leave the responsibility for the formulate a permanent and consistent way, Suite 200, Los Angeles 14, Calif. development of statements of basic ac­ policy of taxation.” The Certified Public Accountant 15

Harry Ligtermoet Obituaries Harry Ligtermoet of New York, N. Y., died September 30, at the Neurological Institute, after an illness of six weeks. He was 62 years of age. Born in Rotterdam, Holland, Mr. Ligtermoet came to this John S . Biggs Walter A. Hurley country when he was eighteen, and con­ John S. Biggs of Washington, D. C., Walter A. Hurley of New York was tinued his studies at the University of died August 11, after a prolonged illness, among those lost in the plane which fell Pennsylvania. He was subsequently grad­ having retired from active practice a few into the Hudson River off Edgewater, N. J., uated from that university. He was a years ago because of his health. In 1922 November 19. He was forty years old partner of L. H. Conant & Co., New Mr. Biggs received CPA certificate No. 65 and a native of New York City. He had York, having been associated with that from the State of North Carolina, and in been associated with the firm of West, firm since 1920. He held the CPA cer­ 1924 became an associate of the Institute. Flint & Co. as staff member and partner tificates of New York and New Jersey for the past twelve years, with the excep­ and was a registered municipal accountant F. H. Goldsberry tion of a brief interval when he practiced of the State of New Jersey. A member F. H. Goldsberry of Nacogdoches, public accounting under his own name. of the American Institute of Accountants Texas, died several months ago. Mr. Mr. Hurley attended the School of Bus­ since 1934, he was also a member of the Goldsberry was born in Gonzales, Texas, iness at Columbia University. He was a National Association of Cost Account­ in 1908. He attended Texas State Teach­ certified public accountant of New York ants and of the Advertising Club of New ers College and the University of Texas. and had been a member of the American York, Inc. Institute of Accountants since 1935. He He was a certified public accountant of Thomas M. Peirce, Jr. Texas and Louisiana, and had been prac­ served for several years on the Institute’s ticing public accounting under his own informal committee on lecture and study Thomas M. Peirce, Jr., of Philadelphia, name since 1932. He became a member groups, and in recent years had been Pa., died November 2 of a heart ailment. of the American Institute in 1938. working with the Institute’s board of ex­ His age was sixty-seven. He was admin­ aminers in the preparation of examination istrative executive of the Peirce School of F. A. Hamilton papers for state boards of public account­ Business Administration, which was F. A. Hamilton of Cincinnati, Ohio, ancy. He was a speaker on taxation at founded by his father. Mr. Peirce was a died last January, the Institute has just the 1941 annual meeting of the Institute, native of Philadelphia, and a graduate of been informed. He was practicing public and was the author of a chapter on taxa­ the University of Pennsylvania and of the accounting under his own name. Mr. tion in the Institute’s recent publication, Peirce School. Before accepting the ex­ Hamilton was born in 1874 in Bellevue, Contemporary Accounting. ecutive post at the Peirce School in 1934, Kentucky. He was a certified public ac­ he had been engaged in business in Phil­ countant of Ohio, and had been a mem­ Frederic R. Leach adelphia for many years. He became a certified public accountant of Pennsylvania ber of the American Institute of Account­ Frederic R. Leach of Upper Montclair, ants since 1918. in 1931 and a member of the American N. J., a member of the Institute since 1924, Institute of Accountants in 1941. Mr. died October 21. He was practicing public H om er C. H am m onds Peirce was also a member of the National accounting under his own name. Mr. Business Teachers Association; the East­ Homer C. Hammonds of Oklahoma Leach was born in New York City in ern Commercial Teachers Association; the City, Okla., died October 7. He was a 1877, and was a graduate of Lawrence­ Historical Society of Pennsylvania; the partner of Hammonds & Cory. From 1920 ville School and of the New York Uni­ Pennsylvania Society of the Sons of the to 1929 he was a member of the firm of versity School of Commerce, Accounts and American Revolution; the Philadelphia Hammonds & Nash. During 1929-1930 Finance. With nine of his classmates, Mr. Kiwanis Club; Delta Upsilon Fraternity. the firm was known as Hammonds, Nash Leach was a founder of Alpha Kappa & Cory, and in 1930 became Hammonds Psi, the first professional fraternity in Bus­ Percy Rothwell & Cory. Mr. Hammonds attended the iness Administration. He served as na­ University of Oklahoma. In 1902 he was tional vice-president of the fraternity and Percy Rothwell of Hartford, Conn., a admitted to the Oklahoma Bar. In 1918 was the second recipient of its gold award partner of Hadfield, Rothwell, Soule & he received certified public accountant cer­ for outstanding service. Coates, died November 8 after a long tificate No. 22 from the State of Okla­ In 1905 Mr. Leach received CPA cer­ illness. Mr. Rothwell was born in Bolton, homa, and in 1922 became a member of tificate No. 332 of the State of New York, England, in 1873, and was educated in that the American Institute of Accountants. and served for a time with the Bureau country. He settled in Hartford in 1900 of Municipal Research in New York City. and started his public accounting practice Donald J. Hutchinson Later he became an associate of the Com­ there in 1905. In 1916 he received the Donald J. Hutchinson, assistant trea­ missioner of Accounts, devising and install­ certified public accountant certificate of surer of Chrysler Corporation, Detroit, ing a central purchasing system for the the State of Connecticut, and in 1922 be­ Mich., died May 31, at the age of fifty. City. He was its first Central Purchasing came a member of the American Insti­ He was born in Chicago, Ill. In 1917 Mr. Director. tute of Accountants. He was a member Hutchinson received the AB degree from During World War I, Mr. Leach was of the Connecticut Society of CPA’s, the Harvard University, and in 1927 he be­ head of the Appropriations Bureau of the Hartford Club, the Hartford Golf Club, came a member of the American Institute Control Division of the Ordnance Depart­ Wampanoag Country Club, and St. John’s of Accountants. ment. Lodge, A.F. & A.M. 16 The Certified Public Accountant Applicants Recommended for Admission

The board of examiners has given con­ Maryland Oklahoma sideration. to applicants for admission to *Martin A. Barlly, Baltimore *Charles F. Murray, Oklahoma City the American Institute of Accountants and Philip Hudson, Baltimore †Charles Steinbock, Jr., Baltimore recommends the election of twenty-five Oregon applicants for admission as members and Massachusetts *Harvey A. Michaelis, Salem *MyIes R. O’BIisk, Portland sixteen applicants for admission as asso­ Arthur E. Johnson, Boston Phillip W. Judson, Springfield ciates who have been accorded credit for Pennsylvania having passed examinations acceptable to Gerry Keene, Boston Benjamin Loeb, Boston Nathan P. Balmuth, Pittsburgh the board of examiners. Twenty-three ap­ *Robert L. Bentley, II, Philadelphia plicants for admission as members and Michigan *George W. Crowe, Philadelphia twenty-eight applicants for admission as Edward B. Cain, Detroit John J. Keetz, Philadelphia associates have passed the Institute’s exami­ Convis D. Cole, Detroit *Robert L. Leonard, Philadelphia R. Wayne Garlock, Lansing *Max S. Mayer, Philadelphia nation for a CPA certificate in cooperating Jack E. Schmelz, Detroit states. The board recommends eleven *Robert L. Williams, Detroit Rhode Island associates for advancement to membership. Franklin A. Burke, Providence Minnesota California *Kenneth C. Schlichter, St. Paul South Carolina T. Hayes Anglea, Los Angeles Missouri Hartwell S. Blanton, Spartanburg *Francis J. McGowan, Santa Barbara Amos E. Allen, Kansas City *Richard F. Steel, Los Angeles South Dakota *Merle E. Whitbred, San Francisco Oliver F. Ash, Jr., St. Louis Frank Chervitz, St. Louis *Sylvan N. Hagenson, Aberdeen Colorado Harvey Eder, St. Louis *Ralph F. Jackson, St. Louis Tennessee Harvey E. Roelofs, Denver Charles J. Kappes, St. Louis William P. Jordan, Memphis Connecticut Montana Texas Meyer E. Bailey, New Haven †Conrad T. Bjornlie, Great Falls Alwin Adam, Houston District of Columbia Nebraska *William P. Colquitt, Dallas †Walter R. Flack, San Antonio †Vinton E. Lee, Washington †Philip G. Johnson, Lincoln *Herbert C. Graham, Houston Florida New Jersey Emery E. Griffin, Houston *George R. McGrath, Union *Lester H. Klaeveman, Austin †Wh. Jackson Callahan, Miami Gholson E. Rigby, Austin Athos L. LaSalle, Miami New York *Ray B. Smith, Dallas *Robert Parker, Miami Samuel M. Borisoff, Rochester Georgia Stephen Chan, New York Utah *William T. Collins, New York * Robert L. McGee, Salt Lake City Clarence R. Bush, Macon Henry C. Elfers, New York †Charles E. Williams, Jr., Savannah Meyer Greenberg, New York Virginia Idaho *Mary A. Guncheon, New York *L. Guy Bennett, Richmond †Erich Haas, New York *Jerry B. Cunningham, Bristol *Norton F. Graham, Boise Oscar Kimelman, New York Alton L. Good, Bristol Illinois Philip B. Kravitz, New York Jesse W. Massey, Jr., Norfolk *Benn Lieppe, New York *John S. Rennolds, Richmond *Robert R. Carlson, Chicago Harold A. Meng, Rochester Norman Herz Feingold, Chicago William S. D. Niven, New York W ashington *Solomon Z. Friedman, Chicago *Norman Olnick, New York *Theodore N.Perry, Chicago *Lester C. Hayden, Seattle *Joseph Peters, New York *George F. Mullally, Seattle †William H. Stout, Chicago Frank H. Schneider, New York *James D. Yates, Chicago *Saul Silverstein, Glens Falls W isconsin Indiana *Nathan M. Stern, New York *Richard G. Hawkins, La Crosse †X. Bender Tansill, New York *Elmer L. Sackrider, Terre Haute Austin T. Tebbens, New York These applicants do not become mem­ Iowa †Arthur B. Toan, Jr., New York *George W. Vroom, Jr., New York bers or associates until voted upon by Waldo E. Brooks, Dubuque Bernard L. Wind, New York council and declared elected by the presi­ dent. If protest is to be made against any Kansas North Carolina George W. Batz, Topeka James M. Williams, Raleigh applicant on the list it should reach the Olin C. Tyler, Kansas City office of the Institute on or before Decem­ Ohio ber 31st. Louisiana Carrol R. Dowd, Cleveland *Charles M. Carriere, New Orleans Herbert J. Hanlon, Cleveland *Indicates associates. *James O. Mullino, Baton Rouge Ernest Eugene Ray, Athens †Associates advancement to membership.