Knowledge that Transforms

Reviews the book "Cases in Profit Planning and Control," by Glenn A. Welsch.

This article provides a descriptive and empirical look at the relative levels of professional autonomy enjoyed by certified public accountants (CPA) in the different types and sizes of CPA work situations. Professional autonomy is one of the most basic and valued characteristics of a professional occupation. It means the freedom or prerogative of professionals to carry out their professional work activity according to their own collective and, ultimately, individual judgment in the application of their profession's body of knowledge and expertise. Since only the professionals themselves and their professional peer group possess the relevant knowledge and expertise, neither clients nor any public body is seen to have the right or ability to direct or pass judgment over their work. The first point revealed by the survey data was the widespread belief among CPA themselves that large organization work situations provide much less opportunity for professional autonomy to CPA members or employees, even where such large organizations are professional CPA firms. The second point revealed by the data was that the actual relationship between large organization and professional autonomy among CPA is more subtle and complicated than either the own belief or the thrust of the most previous theoretical and research literature of the CPA.

This article comments on the proposed model by Myron J. Gordon for the transfer price problem using a socialist economy as the locus of inquiry. The problems posed by a bureaucratic organization, the need for some kind of sanctions, and the essentially subjective considerations underlying all pricing models are correctly identified as major obstacles in the way of a system which attempts to replicate a market economy without the constraints imposed by relative freedom of economic action. A fundamental weakness of Gordon's approach, however is its reliance on the neoclassical theory of the firm as an image from which such an investigation can proceed, and this is coupled with a specification that one of the conditions which the transfer price system must satisfy is that the prices approximate the characteristics of perfectly competitive prices, and have similar consequences for the allocation and utilization of resources. The article concludes that neither Gordon's model of the firm in a socialist economy, nor his postulated condition that prices must approximate to those which would obtain in a perfectly competitive market economy are acceptable approaches to the solution of the transfer price problem. The answer to this problem is urgently required in order that we may extend the boundaries of accounting to comprehend areas of economic activity which are, as yet, relatively unstructured. It will not be found, we suspect, to lie in the application of neoclassical price theory to problems which that theory was never intended to handle.

This article examines selected personality characteristics of certified public accountants (CPA). The literature provides evidence that accountants are negatively stereotyped as cold, aloof, nonsociable, submissive, shallow, weak, passive and lacking sensitivity. There are conflicting data regarding the appropriateness of the stereotype since some studies give segmented support while others deny its existence. Comparisons of personality characteristics, as measured by the California Psychological Inventory, were made between eight different occupational groups and an accounting sample of fifty-six CPA firm employees to test the appropriateness of the stereotype. The comparisons revealed that CPA firm employees possessed higher personality profiles when compared to samples of salesmen, bank managers, business executives, city school superintendents, architects and military officers--partially denying the validity of the accountant's stereotype as dull, wary, cold, and aloof. When contrasted with practicing dentists and research scientists, the accountants generally scored lower on the test scales. The more extensive education of these two groups account for the difference. The negative attributes of poor interpersonal relations and socialization simply did not surface. Since the CPA firm employees significantly higher than several comparison groups on the sociability, self-acceptance, socialization, self-control, good impression, psychological-mindedness and flexibility scales. The accountant's stereotype may not only be unwarranted, it may also be inappropriate.

Reviews the book "The GAO: Untapped Source of Congressional Power," by Richard E. Brown.

Reviews the book "Introduction to the Theory and Context of Accounting," 2nd ed., by Roy Sidebotham.

Reviews the book "Corporate Audit Committees," by R. K. Mautz and F. L. Neumann.

Reviews the book "Federal Tax Policy," Revisited Edition, by Joseph A. Pechman.

Reviews the book "Computer Control Guidelines."

The article demonstrates the lack of consonance between generally accepted accounting methods and the conservative stance expressly avowed in Accounting Principles Board Opinion 11. It makes recommendations for changes in present "generally accepted" methods and presents the theoretical basis for such changes. The problems discussed will involve not only loss carry forwards, but also important related questions concerning the reporting of tax effects of timing differences, prior period adjustments, and the nature of deferred tax charges and credits. Tax laws rarely prescribe financial reporting methods and, therefore, the use of an acceptable financial reporting method rarely circumscribes the freedom a company has to select among alternatives available for tax reporting. Since the motivation for selecting financial reporting methods has to do with the projection of a financial image whereas for tax purposes management's primary concern is to defer payment of taxes as long as possible, the existence of timing differences is a normal circumstance for almost all corporations.