Knowledge that Transforms

The article presents news related to accountancy. The American Institute of Certified Public Accountants has begun publication of a new bi-monthly magazine with the March 1964, issue of Management Services: A Magazine of Planning, Systems and Controls. It will be concerned with any application of accounting or measurement techniques, which can improve management's ability to manage. A bill recently passed by the States-General is the basis for new regulation of the accounting profession in the Netherlands. Provision is made for registration of accountants. For a transitional period, admission to the register will be open to candidates holding a university certificate or a certificate of equal qualification, but finally only a university certificate or a certificate of the Nederlands Instituut van Registeraccountants will be accepted. The annual convention for 1964 will be held on the campus of Indiana University, Bloomington, Indiana on August 31, 1963 through September 2, 1963. The Ninth Annual Petroleum Accounting Conference will be held on the University of Wichita campus, May 8, 1964.

Some of the business problems involve determining the problem and the alternatives, obtaining the information relevant to the problem's resolution, establishing where the required information can be obtained, selecting the appropriate methods of analysis or synthesis, considering the problem and the limitations of the information and preparing the results of the investigation for dissemination. The dynamic case approach seemed especially suited to studying these and related, subsidiary issues. This method was therefore employed on an experimental basis in the undergraduate, management cost accounting course at the University of California, Berkeley. In conclusion, the author had been greatly impressed with the pedagogical potentialities of the dynamic case in management accounting courses. Although no empirical evidence can be offered to substantiate a claim of greater efficiency in the learning process the author nevertheless believes it to be the case. And the use of the dynamic case possibly integrated with the business game in an expanded form to cover the other business areas, would seem to be an ideal means of integrating a student's knowledge prior to graduation.

The article informs that the steady appearance of new text-books on auditing is a indication that the study of the subject has an assured place in accounting courses and business schools. It can perhaps also be reasonably inferred that the general similarity in distribution of space to aspects of auditing in The major textbooks indicates a general consensus among writers and teachers regarding the proper field of enquiry and the stress to be laid on various parts of the subject, There are, however, some voices critical of the way it is frequently taught and even critical of granting it a place in undergraduate accounting studies. In Australia there was some feeling at the 1962 meeting of accounting teachers' that auditing along with other purely professional work in accounting should be deferred to master's degree level, or at any rate until alter taking the bachelor's degree. In a number of places, the exposition of each book becomes quite conversational, dispensing advice on how the professional auditor should conduct himself, and indicating the respectability of his activities. Typically, the auditor is a respected member of the business community and frequently holds important civic posts. His counsel is sought by business men, and, indeed, many members of the profession have transferred to business and occupy important management positions.

The article informs that the accompanying financial statement represents such a goal-something possibly unattainable, but nevertheless desirable. The balance sheet in use today is primarily a report of investment-the amount invested by owners and by creditors, and how the investment has been put to use, the various types of assets an enterprise owns. In order to prepare a statement comparable to the example given with this article, there is no doubt that a CPA will have to extend his competency in such areas as insurance coverage, personnel practices, sales tactics and purchasing procedures. Before discussing the changes proposed in the following statement, it should be pointed out that stimulation of thinking is really the basic objective of the authors in advancing such ideas.

The structure of an integrated information system is difficult to define, and practical tests for its boundaries are evidently needed. This paper considers the organizational limits of such a system with- out detailed consideration of mechanization and its effects. One purpose is to make possible some initial decisions as to what systems and what organizational units might be encompassed in an initial plan for integration. The configuration is shown to be irregular and its limits are shown to be decided by pragmatic considerations. No attempt is made to enumerate all possible sub-systems that might be considered, although examples familiar to accountants have been furnished. Criteria are expressed in general terms, due to the varying information needs and problems of individual enterprises. The legal definition of a corporation is not considered to be adequate for defining the area over which an integrated system might be imposed. In addition, an attempt is made to relate sub-systems, and to define requirements for their integration. These requirements essentially are in terms of data processing compatibility (the usual subject of papers on "total" systems) and compatibility of like and unlike sets of data. The latter is obviously important and is frequently overlooked. In analyzing the links between sets of data, a study of intersections is considered to be helpful. The intersections reveal lack of structural compatibility in the organizational dimension (if it exists) and in addition make possible the identification of redundancies in the vertical dimension. Further analysis is required in the latter case, if unwarranted redundancies are to be eliminated.

Reviews the book "Management Uses of Accounting," by Wilber C. Haseman.

Reviews the book "Cost Accounting," 2nd ed., by Michael Schiff and Lawrence J. Benninger.

Reviews the book "Growth Yields on Common Stock, Theory and Tables," by Robert M. Soldofsky and James T. Murphy.

The article focuses on the measurement and objectivity in accounting. The awakening interest in metrological aspects of accounting provides opportunities for critical examination of quite a few contemporary dogmas. Harold Bierman, accountant speaks of it as a step towards "a long awaited revolution in accounting." The first is the proposition that different descriptions or measurements may be used for different purposes. "Different measurements for different purposes" may mean measurements of different characteristics, either by use of the same scale of measurements or by the use of different scales. There is one set of measurements, which results in a representation of financial position, which is serviceable to all users, managers, investors and creditors alike. This is a set of measurements, in the scale of monetary units, of the contemporary realizable prices of all the seeable assets and of the obligations of a firm. This set of measurements is subject to errors of estimation, but these errors are measurable.

Investors interested in the common stock of a company compare the present market price of the shares to several per share values computed from the financial statements of the company, especially earnings per share for the past several years. Recognizing the importance of this trend analysis of earnings per share to investors, accountants agree that when a company increases the number of its outstanding shares through a stock split or a stock dividend the prior periods' earnings should be divided. Since the number of shares is increased but no consideration is received by the company, a stock split or stock dividend is merely a redivision of the stockholders' equity into a larger number of units of ownership. Accordingly, the accountant redivides prior earnings. The issuance of new shares at a price less than the current market price constitutes a redivision of the stockholders' equity value into a greater number of lower valued shares. That is, if the issuance price is lower than the going market price the percentage increase in the number of shares is greater than the percentage increase in the market value of the stockholders' equity.