Knowledge that Transforms

The Institute of Certified Public Accountants of Greece was founded in 1955 by Law No. 3329, which established it not only as a professional association, but also as a practicing firm of Public Accountants. The constitution was formed thus in order to raise the standing of the profession in the face of many adverse conditions. The problems of getting the profession started in Greece may be similar to those in various other countries in which the accounting and auditing profession needs a status lift. The purpose of this paper is to give an account of the rather unique manner in which the profession in Greece has been developed. In the opinion of the author of this article, the manner in which the accounting profession in Greece has been developed has many good practical merits. The regulation of the profession in its early stages of growth helps considerably to ensure that high standards of work are maintained. The strength of the profession is obviously enhanced during this period by a Supervisory Council of prominent citizens whose appointment stems from legal decrees. Theoretical education in auditing needs some considerable development.

Because of the rather limited information currently available about accounting educational practices in the nation's colleges and universities, a survey was conducted in late 1962 to determine current practices at that time of the members of the American Association of Collegiate Schools of Business. The results of this survey were published in the July 1963 issue of The Accounting Review. This survey disclosed that virtually all schools offer the same elementary accounting course to accounting majors they offer to non-accounting majors, and that the most frequently followed practice was in use by well over half of the schools with respect to the number of practice sets required in elementary accounting and in basic cost accounting, and with respect to semester hours of credit for intermediate accounting, basic cost accounting, and basic auditing. Two-thirds or more of the schools have adopted either the most widely used or second most widely used text in intermediate accounting, basic cost accounting, and basic auditing. Considerably more diversity of practice exists among the schools with respect to textbooks currently in use in elementary accounting and as regards the semester hours required for a bachelor's degree in accounting.

Cost-volume-profit (C-V-P) analysis is frequently used by management as a basis for choosing among alternatives such decisions as, the sales volume required to attain a given level of profits, and the most profitable combination of products to produce and sell are examples of decision problems where C-V-P analysis is useful. However, the fact that traditional C-V-P analysis does not include adjustments for risk and uncertainty may, in any given instance, severely limit its usefulness. In many cases, the choice among alternatives is facilitated greatly by C-V-P analysis. However, traditional C-V-P analysis does not take account of the relative risk of various alternatives. The interaction of costs, selling prices and volume are important in summarizing the effect of various alternatives on the profits of the firm. The techniques discussed in this paper preserve the traditional analysis but also add another dimension, that is, risk is brought in as another important decision factor. The statement of probabilities with respect to various levels of profits and losses for each alternative should aid the decision maker once his attitude toward risk has been defined.

The article presents solutions to questions that appeared in the November 7, 1963 Uniform Certified Public examination. There were in all 7 questions related to auditing. One question is related to the examination of fire insurance policies of the Cap Sales Company. Another question aims at opinions expressed by a Certified Public Accountant (CPA) on a client's financial statements. The third question asks for the discussion of control procedures for The United Charities organization based on its statement of receipts and disbursements. The fourth question relates to listing and discussion of various aspects of internal control by CPA after the examination of existing internal control of his client. The fifth question is related to audit procedures to be followed by a CPA in order to obtain an inventory certificate for a manufacturing company. The sixth question asks for information required by a CPA in order to audit a medium sized company's financial statements. The last question relates to preparation of auditor's adjusting journal entries for The Smoky Mountain Manufacturing Company.

A sound knowledge of cost-volume-profit behavior and cost interrelationships is essential to many business decisions. Information which is easily understood but may not represent reality can lead to costly errors in judgment in business decisions. The management accountant certainly has a responsibility to provide management with something more than simply data. He has a responsibility to provide analyzed data, or useful information, for specific purposes. Yet he has a grave responsibility to avoid employing oversimplified techniques, or partial analysis, which may be misused or misunderstood by management. This article serves four purposes. First, to present the application and limitations of the Scatter Graph and Least Squares methods of studying the cost-volume-profit relationships of a company. Second, to present the possible weaknesses or limitations of Break-even Analysis and Profit Graphs. Third, to review some of the major statistical techniques of evaluating the significance of relationships. Fourth, to present the application of Multiple Regression Analysis, with the aid of a computer, to determine the cost-volume-profit relationship.

The article presents questions of the auditing section of the American Institute of Certified Public Accountants (CPA) examination. It informs that when no audit has been performed, any financial statements with which a CPA's name is associated should be conspicuously marked on each page as unaudited.

The article focuses on the integrated use of data processing equipment in teaching accounting subjects. Educators have long realized that accounting students must be introduced to modern methods for processing data. In 1960, the American Accounting Association conducted a survey, which concluded that principal changes expected in accounting education in five to ten years would include a shift to emphasis on electronic data processing. Educators must recognize that a new information technology is developing. Unless the accounting profession asserts its rightful place in this area, a new profession will gain prominence. It would seem that the impact of modern data processing equipment is upon educators. Unfortunately, too many accountants and accounting educators do not seem to realize this. Perhaps they choose not to realize it. The consequence will be obvious. The failure of accountants to familiarize themselves with modem methods will permit the emergence of well-trained machine people who will gain competence and practice in the area of "information technology." It is the accountant who by training and experience is most familiar with business data processing. The problem of creating or implementing the equipment should not be the accountant's problem.

Recent researches' have emphasized that accounting exists to communicate in summary form those economic events affecting the reporting unit. Accounting is not an end in itself, but simply a method of bridging the gap between an economic unit, the entity, and some party or parties, either internal or external, who require information about these events. Thus, the utility of an accounting system is not derived from its elegance, but rather from its ability to communicate the relevant data. The idea that accounting is designed to report economic data to those groups desiring it is important for two reasons. First, and more basic, the accounting system ought to be designed to meet the informational needs which led to its creation. Second, the term economic data is used to denote data which are useful in decision-making and for control. The purpose of this paper is therefore, twofold. First is to stress the need for utilizing such an approach in accounting reports. Second, to illustrate how such an approach can be implemented in a specific instance, the presentation of common shareholders' equity on the balance sheet.

Reviews the book "Basic Cost Accounting," 2nd ed., by Samuel W. Specthrie.

Education is presently set in an environment that is curiously paradoxical in nature. Curricula which give appropriate emphasis to the multivariate character of business problems should not be circumscribed unduly, yet, an overexposure to the myriad of complex influences which compound the difficulty of problem solution may well create for the average student a greater measure of confusion than resolution. Educators have long recognized this phenomenon and have increasingly sought to provide the student with an atmosphere of business and to develop in him an appreciation of the relevance of his field of special interest. This belief in the importance of relating the various business stimuli and the collateral disciplines in a climate which focuses attention on the practical problems of decision-making has resulted in a number of significant educational innovations. In general, they are all essentially variants of two basic concepts namely interim work experience programs and scale simulation, in the classroom, of the interaction of the various business influences.