Knowledge that Transforms

Reviews the book "Taxable and Business Income," by Dan Throop Smith and J. Keith Butters.

The Harvard Business School and the case method are so commonly associated, that anyone teaching at Harvard should be considered, per se, an expert in the case methods, according to the author. In this article the author describes various aspects of teaching of accounting by the use of case methods. Most proponents of the case method refer to its complete opposite as the lecture method, in which the instructor occupies the center of the stage and sets forth his views as if from on high. The case method of teaching, of course, uses a case as its teaching vehicle and a case has been defined as a written exposition of one or more business problems. Case method teaching techniques do vary widely from the lecturer to the devotee of the non-directional method who acts mainly as a moderator never expressing an opinion. These techniques vary due to the differing personalities and abilities of the instructor as well as with differing course objectives and data. Probably all forms of teaching have as their objectives the imparting of a fund of knowledge and a development of the personal skills and abilities of students to utilize this fund of knowledge.

This article presents several considerations which suggest the need for more emphasis on the qualitative factor in grading examinations: (1) The speed and accuracy with which students work vary over a wide range. A large group of students, for example, was required to foot, crossfoot, and prove several columns of figures. One man finished in nine minutes while about one fourth of the group was unable to complete the work correctly in two hours. In the face of such variation there is no such thing as an "hour test." (2) The nervous tension, or in a few cases panic, with which students approach formal examinations, particularly in accounting, impairs the validity of the results. These tensions are due largely to the knowledge that a prescribed task must be completed within rigid time limits and that a small error in arithmetic or interpretation can be disastrous. (3) It is better for the morale of both teacher and student to have part of an examination well done than to have the whole examination poorly done even though accumulated point values are the same. (4) A student who knows he does not know the answer to a question deserves more credit than one who thinks he knows but does not.

Reviews the book "Intermediate Accounting," by Joseph A. Mauriello.

Accounting teachers can easily be so concerned to help their students grasp technicalities that they may miss the opportunity to drop suggestions now and then regarding the social service rendered by modern accounting. Business activities are such a prominent part of modern life that an elementary understanding of business, such as can be obtained through even a little study of accounting, can prepare the individual to be a more comprehending citizen. For example, business enterprises generate a very large amount of government revenue. Some understanding of enterprise accounting therefore provides some understanding of one of the bases on which modern government stands-government services paid for by revenue derived from business profits. Accounting not only gives us a glimpse of business as a generator of tax revenue but it helps us to realize that business, in one way or another, "is the paymaster of us all." Out of business activities comes wages of workers, wages of capital, wages of management. Business-by division of labor, by use of machine power, by developing mass distribution of products has created vast areas of employment for men and capital.

Reviews the book "Essentials of Accounting," by William A. Paton.

The Air Force has been auditing procurement and supply contracts since 1926. In practice, a wide variety of audit work is performed but the major part of procurement auditing affects two general types of contracts-those of a cost-reimbursement nature and those of a fixed-price nature with price redetermination provisions. It is generally agreed that it is appropriate for the Air Force to verify the validity and propriety of claims for reimbursement submitted by contractors under cost- reimbursement type contracts. Obviously, it is impossible for auditors to perform a detailed audit of all transactions relating to the average Air Force contract, therefore, recognized selective audit methods are utilized to the fullest extent practicable. Certain basic factors which auditors are required to consider are: (1) adequacy and reliability of the contractor's accounting system and related internal controls, (2) previous experience with the particular contractor on Government contracts, and (3) the volume of cost to be audited, i.e., the amount of the claim or the amount of the cost statement in relation to the effort and time to be expended on the audit and in relation to the contractor's other business.

Reviews the book "Insurance Agency Accounting," by Ernest Lawrenson.

Many questions arise related to courses to be taken by accounting students if they plan to enter industrial accounting. At the University of Akron, Ohio, the Akron chapter of the National Association of Cost Accountants (NACA) formed an educational guidance committee to help students. The University of Akron sought the assistance of the Akron chapter for the purpose of improving its curriculum and aiding the students who would be working for employers represented by the wide membership of NACA. The University turned to the Akron chapter because it includes accountants engaged in a wide range of activities, from the one-man accounting office to the controllers of some of America's largest factories. All types of educational backgrounds, from those who studied their accounting by correspondence to graduates of colleges in every region of the country are represented in its membership. Conditions change, jobs change, so the educator believes that a broad, firm foundation enables a student to progress vocationally much farther in the long run, and in addition, make him a whole, well-rounded person rather than a narrow technician.

In the real world of business affairs, however, the conception of the controller as a member of the management team, contributing to and concerned with the problems of overall administration and effective control, has grown. And it is becoming apparent that the subject of controllership (as apart from the professional aspects of public accounting) is not only relevant to, but important for collegiate business schools. Courses under the title of controllership are growing in number, and there are now at least thirty schools that offer a course in this subject. Part of this is attributable to the appearance of textbooks and other teaching materials emphasizing the viewpoint and the content of the controllership notion, but the underlying factor is the need for education of a different sort than is provided by professional specialization in accounting. On the whole, it is a fairly obvious fact that many of the students who "major" in accounting actually find their ultimate careers outside the field of public accounting.