Knowledge that Transforms

It was in May, 1921, that the Nippon Kwaikeishi Kwai or Japanese Society of Public Accountants was first formed with a very limited number of members. The first professional accounting organization in Japan, it was merely a private body at the time of its formation. However, the society was incorporated in November, 1922, in accordance with Mimpo, the civil law covering incorporation of such organizations. Although a few other societies of accountants did exist in the country at that time they were rather small and inconsequential. Many years before the Japanese Society of Public Accountants was formed, a bill to regulate the profession and to register accountants had been placed before the House of Representatives. The bill was introduced eight times in the Japanese Diet from 1914 to 1927, when a law, named "Keirishi-ho," was passed and put into force in September of that year. By the terms of the law all registered accountants are called "Keirishi." It should be remembered, however, that under the law registration is optional; but nonregistered accountants are not influential and their number is very small. At the end of June, 1939, there were 8,994 registrations, although most of them are not practising accountants.

This article presents brief description, about the suggestive advocation and adoption of standards by accountants in the preparation of financial statements, presented by the editor of the journal "The Accounting Review," with discussing accounting theories and practices. In 1929, the editor proposed to the American Society of Certified Public Accountants a program of research that would lead to the adoption of professional standards. The December 1934 issue of the journal, containing an editorial entitled "A Nervous Profession," discussed the traditional ideas of accountants and strike-suits which were being brought against members of the profession were becoming a legalized racket. The Securities and Exchange Commission in one short year had already made well-founded complaints against the accounting profession; that the profession had been singularly unresponsive to the enlarged social responsibilities the Commission was trying to get the profession to acknowledge; and that individual members of the profession had strenuously opposed regulations which the Commission had made over certain accounting procedures.

Although auditing, in varying forms, has been practiced for a long time, little attempt has been made to formulate a theory regarding the subject. Accounting is a process of keeping records of current business facts according to a system of theory and practice suitable to the circumstances. The auditor is a critic and auditing is an analytic, retrospective process of examining the system of accounting theory and practice of a specific enterprise. Although many audits fall into the same general class as to purpose, in no two cases are all the conditions identical. Every audit is an individual problem the solution of which requires a thorough understanding of the particular circumstances obtaining in that case. Since the auditor must judge the validity of the evidence supporting the transaction it is necessary for him to be able to recognize what is valid and what is not valid. Verification by impartial testimony based on information in the possession of persons outside the business is the most valid evidence that can be obtained to support any given item or transaction. An auditor must decide whether to secure confirmations from all or only a portion of the customers. In addition he must decide whether to ask each customer circularized for a statement as to the correctness of the balance shown owing to the company or to notify the debtor that he stands charged with the amount, with the request that he advise the auditor as to any exceptions that he may take.

Reviews the book "Expenses and Profits of Limited Price Variety Chains in 1938," by Stanley F. Teele.

Reviews the book "Principles of Accounting," 4th ed., by R.B. Kester.

Reviews the book "C.P.A. Review," by Louis Marder.

At some time or another the question "how do I get a job with a decent accounting firm?" has more or less tortured the minds of many young accountants. In the past, and even today, obtaining information on this subject has been an exceedingly difficult task. Although many articles on the duties and problems of the junior accountant have been written, most, if not all, lacked some important element of truth. They necessarily were compiled either from the limited experiences of the writers themselves or from the experiences of a small number of junior accountants. The "real" information was lacking, for no large accounting office would reveal any of its innermost secrets. However a good deal of this information has now been made available. The employment policies of a number of representative accounting firms have been described in the recent testimony in the McKesson and Robbins Case' in which twelve outstanding accountants gave expert testimony on many aspects of accounting. Accountants and their policies of hiring and training junior accountants in the country may be divided into two major groups: a) Those who accept the idea prevalent in Great Britain that accountants should be brought up through the apprenticeship system, and b) Those who choose their staff by retaining college graduates with the proper academic background in accountancy and allied subjects, and who give their staff subsequent training.

Reviews the book "Auditing Principles and Procedure," by Arthur W.Holmes.

The article focuses on the progress made in the U.S. governmental accounting and the future prospects related to the subject. The Federal government's accounting for general funds has reached a standstill because the Comptroller-General's office has been more interested in rejecting minor expenditures than in setting up a modern and complete accounting plan for the entire Federal establishment. Local governments have improved their general accounting, budgetary accounting, and utility accounting and have just begun to enter the field of cost accounting. The rapid development of governmental accounting awaited the establishment of recognized standards. Standards, principles, and recognized procedures have now been developed on a much broader scale through the work of the National Committee on Municipal Accounting, the Municipal Finance Officers' Association, the American Institute of Accountants, the American Accounting Association, and other allied groups. At present the general accounting procedure of the Federal government is utterly inadequate to present factual information about assets and liabilities. Governmental accounting has reached its best development in cities over 10,000 population. The counties have been much slower to adopt improved procedures because county finance officials are usually elective; because the county government lacks coordination; and because the term of office of county officials is shorter than the term of city officials.

This article focuses on various educational and ethical issue in accounting education and training. This article is concerned only with the education of qualified accountants, public and private, rather than the technical training of bookkeepers, clerks, and other routine workers due to the belief that the training of these routine workers is an important problem, but one entirely separate from that of the broad education of an accountant. Based on opinions of various accountancy firms of New York State, it is suggested that the accountant should be college educated and trained. Supposedly the widest variation in this belief would occur with respect to the relative emphasis that should be placed on cultural education, broad business training and technical accounting training. The author reports that many public-accounting firms give preference to graduates from a four-year cultural course over graduates from business and accounting courses which are deficient in cultural training. He suggests that the accounting courses proper should emphasize fundamental principles and theory, and managerial uses of accounting information, rather than bookkeeping procedure, routines and technique.