Knowledge that Transforms

The subject of education for controllership is one on which much has been said and written. It is therefore difficult to express any views which are really original. The subject is, however, a fascinating one. This is particularly true because education and the views with respect to it are constantly evolving. Controllership, especially, is a new concept just beginning to emerge in the sense of a definable and measurable type of professional activity. The developmental and controversial character of the subject are nevertheless the very characteristics which make appropriate continuing contributions through new experience and individual thinking. The author therefore venture to add his own thoughts-with the objective, if nothing more, of stimulating further thinking and action which may be the basis of further progress. A number of people have classified the controllership functions in different ways thus seeking to provide some insight into the nature of the job and thus into the type of man required to successfully discharge the responsibilities involved in carrying out those functions.

Reviews the book "Studies in Income and Wealth," Vol.12.

The article focuses on the presentation of the investments in corporate annual reports. There is lack of uniformity which makes it difficult for the reader to interpret the figures, descriptions are usually too limited, and the results of investment operations are almost always buried with other items on the income statements. As a result the reader is unable to judge the ability of management insofar as the investing of funds is concerned. All holdings in subsidiary companies are investments. With this interpretation the investment account would certainly be by far the most important item in many corporate reports. There are several logical reasons for avoiding this treatment and preferring the use of consolidated statements. But even after eliminating all controlled subsidiaries the investment account is still of major importance in most financial statements. Whether the amount involved is large or small, there is a fundamental reason why the investment account deserves special treatment.

The article focuses on the current accounting problems in the U.S. Most of the current problems arise in the appraising of transactions reflecting new methods of doing business or matters upon which there has been a wide difference of opinion among recognized accounting authorities for many years. Thorough analysis and discussion of the new problems and reappraisal of the old controversial problems are matters of mutual interest for all of us here, as well as for the registrants and certifying accountants directly concerned. Experience seems to indicate that most registrants and their independent public accountants prefer to have the financial statements and accountants' opinion contained in the report to stockholders in substantial agreement with the report to be filed with the U.S. Securities and Exchange Commission (SEC). There is no real difference in our requirements for disclosure of inconsistencies in accounting from those which prevailed in the accounting profession prior to the existence of the SEC.

This article discusses various developments related to the field of accounting. In Great Britain, the Association of University Teachers of Accounting held its 1950 conference at Manchester University in September. The secretary of the Association is David Solomons of the London School of Economics. In the George Washington University, Ralph Dale Kennedy, currently head of the department of business administration, has been named head of the newly created department of accounting. In Catholic University of America, District of Columbia, Richard J. Bannon has been appointed instructor in accounting. In University of Alabama, Alabama, Richard Brewer is on leave for the current year teaching at the University of Hawaii. Lee Glover from Hawaii is teaching here on an exchange basis. At University of San Francisco, California, A. D. McNeil, director of CPA training, addressed the California Society of CPA's on the impact of accounting on government and business, at their annual meeting in San Francisco in June.

The article presents information about the accounting faculty of several universities in the U.S. Walter Meigs of University of Southern California, has served recently as chairman of the accounting section at the meeting of the Pacific Coast Economic Association. From the same university. George T. Altman has given addresses on tax matters to the Pomona Valley Bar Association, the American Society of Women Accountants, the California Society of Certified Public Accountant's, the Life Insurance and Trust Council of Los Angeles, and the National Tax Association. H. T. Scovil of the University of Illinois, was selected for the annual award for "outstanding service to the accounting profession" by the American Institute of Accountants at the annual meeting in Los Angeles, Illinois, on November 1, 1949. This is the first time an educator has been given this award. Scovil has been head of the Department of Business Organization and Operation at the University of Illinois since 1917, was the first educator on the Board of Examiners for the National Certified Public Accountant examination.

Reviews the book "Balance Sheet Price Level Analysis," by Othel D. Westfall.

There are accountants who have a special kind of ambition, they want to be more than good accountants, and they want to be called scientists. These accountants, small in number but rather important as authors enjoy much respect. Therefore, it may be worthwhile to examine what their demand is based upon. Without doubt, there are several professions, which lay doubtful claims to the field of science as, for instance, historians and archaeologists. But people need not examine the validity of borderline cases since no philosopher ever has discussed the possibility of recognizing accounting as a field of science. An accountant should help the community by rendering services connected with the recording and verifying of business transactions and, especially, connected with the preparation and interpretation of financial statements. For this purpose the accounting profession has developed a body of rules. These rules are not based on logic and scientific methods. The author thinks that an accountant has no reason whatsoever to cast longing glances at the field of science or even to pretend that his work is scientific in nature.

The United States Supreme Court in the recent Culbertson decision has unequivocally declared that the alternate tests of original contributed capital and vital services as supposedly set up in its earlier Tower and Lusthaus decisions are not decisive but only circumstantial evidence in determining the tax legality of family partnerships. The true test is the realism of the factual situation. The unequivocal Culbertson realism is a significant contribution to the solution of family partnership controversies. The earlier alternate arbitrary Tower and Lusthaus tests discriminated against a partnership interest and favored real estate, stocks and bonds. They held that the donating of real estate to create a tenancy by the entirety or a joint tenancy, or of stocks and bonds to organize a family corporation or an unrestricted family trust yields taxable income for the donees and not for the donor. On the other hand, an equally genuine donation of a partnership interest is valid for all purposes but its income is attributable to the donor when the asset originated with him.

Before commenting on the organization of courses in tax accounting or discussing the methods of instruction which might be most effective, the author wants to review the responsibilities of the accountant in connection with tax work. The nature and extent of the tax work ordinarily done by accountants are important considerations in deciding matters of organization and method, if the tax accounting courses are to provide professional training. Federal, state, and local tax returns are usually prepared either in the accounting department of the taxpayer or by a public accountant. In either case, the accounting department must assemble the information required by the various taxing agencies. Also, the chief accounting officer should provide counsel and guidance in connection with management decisions, which may involve tax consequences. Unfortunately, this last mentioned service is often neglected and possible tax economies overlooked. Tax instruction for students who are specializing in the field of accounting should reflect both the nature and extent of the accountant's tax work.