Abstract The justification for the adoption of standard cost should include the point that a proper or objective cost, however defined, can exist independent of subjective or incurred cost, at least temporarily. Standard cost for control purposes usually takes into account, or at least rationalizes, all expected expenditures and charges related to the manufacturing process. If competent factory engineers and superintendents are given a free hand in designing a factory for a stated rate of output of a product, there will be one combination of production factors which will be the most economical combination. Any deviation from this combination will yield a higher unit cost of output. Presumably the word objective can be used to describe such a unit cost. The isolation of this non-essential element from manufacturing cost, as ordinarily arrived at, might not be a difficult matter under all circumstances. If production is fairly standardized, it is likely that the rate of production is increased by exactly duplicating previously acquired combinations of factors of production, assuming stable conditions, and that it is decreased by ignoring similar combinations of factors of production.

Abstract There is a present need to devise and establish by authoritative recommendations of the profession a set of accounting concepts and standards, which will be generally accepted and adhered to in the determination of corporate net incomes, so that the findings of the accountant as expressed in the annual reports of American corporations with regard to the amount of the income accrued or loss sustained during the fiscal period, will be accepted and relied on by the public and all interested parties as definitive and conclusive and expressing substantially the facts and the result of the events which took place during the period. In the opinion of many accountants such a codification of standards for income calculations would be an important step forward toward allaying the suspicion and lack of faith in the income determinations presented in corporate financial reports. The great usefulness and social utility of such a development in the accounting profession can hardly be questioned, because if it can be achieved it will help to lay the factual foundation for impartial social control if national economy. It is true that in the determination of corporate income for any period of time opinions and estimates play an important part in greater or less degree, depending on the kind of business and the nature of assets.

Abstract Recent developments in auditing receive considerable attention from accountants. The literature and other information available, which relates to auditing in the U.S. up to about the beginning of the twentieth century, seem to indicate that auditing was then completing its first major phase of development. It is generally recognized that auditing in Great Britain had been instituted to a great extent by specific statutory requirements. The principal function of an audit was considered to be an examination of the report of stewardship of corporation directors and the most important duty of the auditor was to detect fraud. Although the adoption of sampling procedures probably represented the most important development in auditing, other changes were beginning to appear, as indicated in the preceding references. This development also seems to represent no departure from the point of view of the detailed auditors, for it seems to represent originally a substitute for the enormous quantity of detailed audit work formerly done in audits.

A study of the efficient allocation problem in production by the evaluation of the merits of private or corporate enterprise versus a centrally directed economy. Presented before a joint meeting of the American Statistical Association, the American Economic Association, and the Econometric Society in New York City, December 29, 1949.