Reviews the book "Reporting and Investment Decisions," by Alan Robert Cerf.

IN recent years considerable interest has attached to economic relations among the nations of the Soviet Bloc. One aspect of these relations which has received particularly intensive analysis has been the terms on which trade has been conducted between the Soviet Union and the communist countries of Eastern Europe.' Dr. Horst Mendershausen, utilizing the now annually published Soviet foreign trade returns, has attempted to throw some light on this question by comparing the average unit values of Soviet exports to and imports from the Bloc and Free Europe, respectively, where the same class of export or import is sold to or purchased from some countries in each group.2 Some of the major results of Mendershausen's analysis for the years I955-58 are as follows: (i) For more than 2 out of every 3 commodities sold by the Soviets to both the Bloc and Free Europe, the Bloc nations have paid a higher average price than the Free European nations. Had the Bloc imported from the Soviets at the Free Europe price, the cost of their imports (of the sample of commodities studied) would have been reduced by the following percentages in the I955-58 period: i6, II, 7, I2. (2) The Soviet import sample is quite small and the results therefore somewhat more tentative. In I955 and I958, the Soviets actually paid the Bloc higher prices for a slight majority of commodities than they paid Free Europe. On the other hand, in I956 and I957, the Soviets paid the Bloc lower prices than Free Europe in roughly 2 out of every 3 cases. The weighted average, furthermore, was very unfavorable to the Bloc in all years. Had they sold to the U.S.S.R. at the same prices that Free Europe did, their receipts (for commodities covered) would have been increased by the following percentages over the years I955-58: I3, 22, 2I, 20. (3) Mendershausen concludes on the basis of the above evidence that the Soviets price discriminate against the members of their Bloc, charging them more for exports and paying them less for imports than they do for comparable commodities in trade with Free Europe. Regarding the procedures which lead to discrimination, Mendershausen concludes:

When discussing the professionalism of accounting, a question that often arises is, how does accounting compare to the other professions, for example law or medicine? Many statements have been made in the accounting literature on the acceptance of accounting as a profession in this relation, but generally these are opinions made by CPA's and very few non-accountant, objective analyses, are ever made. The present stage of the professional development of accounting could be measured by comparing it to some other vocation that has been accepted and recognized as a profession, which at some point in history has gone through a similar stage of development. To make this comparison, a list of authoritative criteria defining a profession should be used as a foundation for measurement. There seems to be no doubt that accountancy as practiced by certified public accountants is generally accepted as a profession. There are a few specific areas where accounting falls below law and medicine in the status of professionalism, but these cannot be labeled as areas of weakness. Rather it is an indication of growth; that accounting is still in its middle stage of development, analogous perhaps to law and medicine in their era of growth.

With the growth in the controlling shareholdings in subsidiary companies the presentation of a consolidated balance sheet in published reports has become the rule rather than the exception. The increase in the use of consolidated statements warrants a review not only from the standpoint of presentation but also from the standpoint of preparation in respect to certain aspects which are peculiar to consolidated statements. In the preparation of a consolidated balance sheet, the elimination of inter-company profits is limited to the interests of the parent company. This means the minority interests of the subsidiaries are considered as outsiders and the profit applicable thereto is properly considered as realized from the standpoint of the parent company. The net effect of this is that the amount of inter-company profit eliminated is represented by the amount of profit which has been taken up by the parent company as at the date of the balance sheet. This treatment is in conformity with the principle that the consolidation is merely a presentation of the parent company's position rather than a combination of the parent company and subsidiaries. Much of the confusion which exists can be traced to certain of the situations which have been outlined above. Of all the items mentioned the most significant lies in the area of recognizing that a process of substitution is taking place in presenting the consolidated statements rather than a process of combination, and that until such time as this basic principle is recognized misconception in the area of consolidation will continue to arise.

The description for this book, Adaptive Control Processes: A Guided Tour, will be forthcoming.