This article presents an account of the examination of the auditing section of the November, 1962 Uniform C.P.A. examination that was given on November 8, 1962 from 8:30 to 12:00 noon, and included seven questions, all of which were to be attempted. One of the question stated that If a person is auditing the Alaska Branch of Far Distributing Co. This branch has substantial annual sales which are billed and collected locally. As a part of the audit it is found that the procedures for handling cash receipts are as follows: Cash collections on over-the-counter sales and C.O.D. sales are received from the customer or delivery service by the cashier. Upon receipt of cash the cashier stamps the sales ticket "paid" and files a copy for future reference. The only record of C.O.D. sales is a copy of the sales ticket which is given to the cashier to hold until the cash is received from the delivery service. Mail is opened by the secretary to the credit manager and remittances are given to the credit manager for his review. The credit manager then places the remittances in a tray on the cashier's desk. Finally the examinee had to describe the irregularities in the cash handling system.

Reviews the book "Memoirs and Accounting Thought of George O. May," edited by Paul Grady.

Accounting is a useful art which probably needs to be used more than it is, but it is possible to do too much accounting and thus waste resources. An example of what appears to be accounting for accounting's sake is the prescription for the world-wide accounting and reporting in the Department of Defense of Departmental Census of Housing constructed with the Commodity Credit Corporation (CCC) foreign currencies. It should be eliminated along with its attendant intricate accounting and reimbursement procedures by the Department of Defense (DOD). A simple reimbursement procedure at Departmental level would provide an inexpensive way of doing business. In order that the U.S. military departments retain trained and skilled personnel, important consideration must be given to morale. A significant facet of maintaining this morale factor among military personnel is the provision of adequate and suitable family housing. This is especially true in overseas areas where dependents are authorized to accompany the military member.

Much has been said about the importance of the science of statistical sampling in the work of accountants, auditors and financial managers. There is no longer any doubt that statistical sampling must become an integral part of the financial manager's, accountant's or auditor's kit of tools, and management can no longer afford to exclude this vital subject from managerial training programs. There are many executive development courses being given both in and outside the Federal Government on such subjects as "automatic data processing," "human relations," "public relations" and "decision making." What is disconcerting, however, is the continued absence from the management training programs of the equally important subject of statistical sampling. This article describes a course recently given on this subject and points out possible ways of spreading successful training programs along this line. Courses in Statistical Sampling have become an integral part of the formal curriculum of a limited number of colleges and universities. It is conceivable that in the not too distant future many more schools will add sampling courses to their curricula. From a financial manager's viewpoint, one of the difficulties with, most of these courses is that they are pitched too high and are not geared to management's needs both in content and instruction.

The auditing section of the May,1964 Uniform Certified Public Accountants (CPA) examination was given May 14, 1964 and included seven questions. Answers which follow are intended to typify those submitted by well-prepared candidates writing within approximately the time limits prescribed. They do not necessarily include all elements for which credit might be given by the Advisory Grading Service of the American Institute of CPA's or by the various state accountancy boards charged with responsibility of issuing CPA certificates. Some of the questions were, 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 audited. When such statements are accompanied by his explanatory comments, the CPA must, five options were been provided. Another question was, when a CPA is examining the consolidated financial statements of a parent company and is utilizing the unqualified report of another CPA for a domestic subsidiary of material importance, the principal CPA, again five options were provided for correct answer.

The use of an allowance for repairs to spread total estimated repair cost over the life of the related asset has been criticized on several grounds. A study of maintenance costs also discloses that there are shadings with respect to the significance of amounts as well as the length of time during which the benefits will be derived. The objective must be, however, to match significant costs with revenue in a sound manner. If, for example, the adjustments of tolerances on a piece of precision equipment is significantly costly and is necessarily at the end of each two-year period in the life of the equipment, costs related to adjustments of tolerances should be allocated to the periods receiving the benefit. Presumably when acquired, the equipment was properly adjusted by the manufacturer. A part of the acquisition cost conceptually was related to the initial adjustment. It seems reasonable that this portion of acquisition cost should be spread over the following two years. The cost of readjustment incurred at the end of the second year should be allocated to the next two year period etc.

The recording part of elementary accounting is a record of the flow of assets through a business enterprise. That is the asset history recorded in the general ledger in summarized and conventionalized form. The accounts tell four things about the assets, namely: the sources of all assets received by the business: the kinds of assets received by the business; the conversion of some assets into other assets; and finally, the reasons why some assets passed out of the business. Assets are the things being accounted for, and all accounts reflect some aspect of the above life history of assets as they pass through the business for which the accounting system has been designed. That is complete accounting for assets: that (not "all assets are owned by someone") is the basis of double entry bookkeeping. The legal relationship between the proprietor and the revenue sources (sales to customers) and between the proprietor and certain dispositions of assets (expenses, cost of sales, and losses) which leads to an income calculation is another story. It is an interpretative calculation based upon the laws of contracts and private property. It should be delayed until the flow story is understood. The flow story exists without the income calculation; as it does in simple estate and fund accounting. To mix the two at the start of accounting instruction is considered to be an undesirable complication.

The article reports on the auditing section of the May 1962 Uniform C.P.A. examination, which has been conducted on May 17, 1962 from 8:30 to 12:00 noon and included two groups of questions as follows, one of the problem given is, "Your client is a small college in a small town. The college has recently elected as treasurer the president of the local bank in which the college keeps its cash funds. The bank is also the custodian of the college's endowment fund securities. Furthermore, certain short-term securities are held at the bank in a safe deposit box to which the president has access. Confirmation requests to the bank in the past have been signed by the former college treasurer and the bank's replies have been signed by the bank president." The problem has been answered briefly as, "the dual role played by the bank president who is now also treasurer of the client organization signifies the absence of normal internal controls over cash and securities. When internal controls are weak or absent, the auditor should extend and intensify the audit procedures bearing on the areas affected. In this case the auditor should arrange if possible for a college official other than the treasurer to sign the confirmation requests."

The article presents questions and answers of the auditing section of the November 1961 Uniform C.P.A. Examination, which was given November 9, 1961 from 8:30 to 12:00 noon and consisted of seven questions, all required. The suggested time allotments were as follows: Problem 1:20 minutes; Problem 2: 15 minutes; Problem 3: 20 minutes; Problem 4: 25 minutes; Problem 5: 25 minutes; Problem 6: 25 minutes and Problem 6: 35 minutes. First problem was that a client, without consulting its CPA, has changed its accounting so that it is not in accordance with generally accepted accounting principles. During the regular audit engagement the CPA discovers that the statements based on the accounts are so grossly misleading that they might be considered fraudulent. It was asked to discuss the specific action to be taken by the CPA. In response to this question, it was suggested that the first step by the CPA should be to discuss with the client the fact that the changes in accounting made during the year are not in accordance with generally accepted accounting principles. The CPA's objective in this discussion should be to persuade the client to discontinue the unsatisfactory practices and to make such changes as are necessary to permit a fair presentation in the financial statements. If the client will not agree to such revisions the CPA should withdraw from the engagement, since he certainly does not want his name to be associated in any manner with financial statements which are so grossly misleading that they might be considered fraudulent.

The American Accounting Association's follows dual objectives of fostering accounting research and improving accounting instruction. This article briefly summarizes each of the major activities that were carried on during the year 1961. The high quality of published articles was maintained in 1961. During the year more than 80 articles were published in addition to the professional examinations, association notes, and book reviews sections. The Membership Committee under leadership of Ralph F. Beckert had a very successful year. As a result of their efforts, over 1,000 new members were obtained. In 1961, seven education committees functioned under the general direction of Vice-President Norton M. Bedford, who also served as Chairman of the Joint Committee on Education. The Continuing Education Committee was asked to investigate the scope and nature of programs of formal study after a person has launched upon a career in accounting, and to inquire into the matter of suitable forms of instruction.