Knowledge that Transforms

Reviews the book "Business Cycles," by Earl C. Hald.

This article focuses on the responsibility of the internal auditor for procedures. Internal Auditing is the independent appraisal activity within an organization for the review of the accounting, financial, and other operations as a basis for protective and constructive service to management. It is a type of control which functions by measuring and evaluating the effectiveness of other types of control. It deals primarily with accounting and financial matters, but it may also properly deal with matters of an operating nature. The article also says that Internal Auditing should not include responsibilities for procedures which are essentially a part of the regular operations of a complete and adequate system or of a properly organized operating department. If the internal auditor is to do a satisfactory job in the matter of auditing procedures, he is presumed to know as much about the design and installation of procedures as do the systems and procedures experts. This calls for proper relations with the latter.

Reviews the books "The American Association of Public Accountants, Its First Twenty Years," compiled by Norman E. Webster and "English Accountancy, 1800-1954," by Nicholas A.H. Stacy.

This article focuses on price-level adjustments. Since 1948 there has been a steady flow of articles on the implications of the price-level changes for accounting reports, by far the larger portion agreeing that these changes had undermined the reliability of the convention financial statements. Between World War I and World War II there had been a very substantial amount of writing with a quite similar import. Expressions of dissatisfaction with conventionally prepared financial statements are widest in periods of rising price levels. At times such as these the detractors of accounting statements bemoan the fact that these statements do not use figures which represent "economic realities," whether asset values, or costs of production, or net income. It is not enough to state an ideal, the approximation of economic income "in accounting terms." The statement that the committee did not attempt to define economic income contains a curious double implication. The purpose of income calculations in practical affairs is to give people an indication of the amount which they can consume without impoverishing themselves.

Reviews the book "The Use of Corporate Financial Statements and Related Data by Organized Labor," by Wilbur F. Pillsbury.

Reviews the book "Cases and Problems in Investments," by Francis J. Calkins.

Reviews the book "Sixth Annual Progress Report Under Joint Program to Improve Accounting in the Federal Government."

The article presents a new perspective on the history of accounting. In Italy, there has always been a lively interest in the history of accounting undoubtedly because the Italians pride themselves on the fact that their country was the birthplace of double entry. One of the most outstanding treatises on accounting published early in this century contains several historical chapters on the development of double and of single entry, the inception of the balance sheet, the first use of reserve accounts and accruals, the origin of the expressions 'debit' and 'credit,' and the beginnings of budgeting. Although the author, Fabio Besta's work first appeared in 1909, it is still considered by many Italians as the Bible for the history of accounting as well as for contemporary problems of theory and practice. Under the stimulus of Besta, some of his students began thorough examinations of medieval account books, but the results of these studies confirmed rather than challenged the findings of Besta.