Knowledge that Transforms

The author discusses the objectives of internal auditing in this article. He enumerates the objectives of internal auditing as a service to management. These objectives are to assure management that the controls are effective both in operation and as media to identify and reveal matters needing managerial review, bring to attention when controls fail to meet those needs, and act on management's behalf as an instrument of check on various aspects of the business controls. He explains the classifications of internal auditing as an appraisal activity and its objectives. He lists the auditor's objectives in the field of management policies. He describes the audit objectives in the appraisal of business and organizational plans. He focuses on the points which need attention in the standards of appraisal. The objectives of an internal auditor, with the accountant and engineer, in appraising the activity of appraisal of performance, and the areas of auditing which require study have been elaborated. He mentions that an auditor can function effectively only if his accounting training is supported by sound business experience.

Reviews the book "Advanced Accounting: Comprehensive Volume," by Harry Simons and W.E. Karrenbrock.

This article presents information on the accounting teachers. There is a dearth of qualified teachers of accounting in schools. Surveys of schools have emphasized a crying need for more instructors who can stimulate and arouse students both by their teaching ability and also by their breadth of practical experience and contact with the business world. The director of the American Accounting Association's placement service has stated that a substantial number of "less qualified" individuals would like to fill available positions in accounting departments. The number of professors who are lecturing to, rather than leading lively class discussions with, 20 to 25 students is far greater than one would like to think. This is a fact, which needs serious consideration. In most academic departments the faculty ranges from the truly inspired teacher through the "satisfactory" classroom performer to the downright mediocre. The teacher who cannot perform satisfactorily before a lecture audience may do very well in discussion sessions with smaller groups of students above the level of the basic courses. As enrollments increase faster relatively than teaching staff additions, some schools of business will be forced to take action, which may effectively raise standards of instruction.

Reviews the book "Canadian Income Tax Appeal Board Practice," by R.S.W. Fordham.

The principle of valuing current assets in general, and inventories in particular, at "cost or market, whichever is lower" has been thoroughly damned, and still remains "firmly fastened on modem accounting." The fact that it is logically inconsistent, aids in distortion, and is often actually un-conservative, is almost as much neglected by accountants. No one familiar with accounting theory or practice needs to be reminded of the inconsistencies and distortions caused by blind adherence to valuations at the lower of cost or market. Many textbooks advocate, but few companies practice, the reduction to a lower market value by means of a reserve for decline in inventory and a charge to an extraordinary loss, rather than swallowing the reduction in cost of sales. This is recommended in an effort to eliminate the misconceptions and the misleading effect, on the results of the following year, of cost or market valuations. More often, however, the inconsistencies and distortions have been ignored or rationalized because of the supposed need for the application of the rule on conservative grounds.

The article focuses on the origin of the trial balance. Double entry bookkeeping and its procedures found its inception in the spectacular expansion of commerce that occurred in Italy after the crusades. The inadequacy of the crude record-keeping procedures in use at that time, made it imperative to devise more efficient methods of bookkeeping to record the increasing flow of complex transactions of a fast growing foreign trade. The ambiguity of terminology, in the works of the early writers on bookkeeping, has caused confusion among recent writers about the nature of some of the recording procedures and the manner in which they were applied. The trial balance is one such procedure. The duality of entries of the ledger thus, established, Luca Paciolo then turns his attrition to the trial balance as a check on the a equality of the debits and credits. These accounts are of a private nature and should therefore be closed into the profit-and-loss account, the latter in turn being closed into the capital account.

Reviews the book "Cases in Cost Accounting," by Clarence L. Van Sickle.

Reviews the book "Financing Business Firms," by Charles L. Prather.

Reviews the book "Railroad Accounting and Statistics," by Edward H. Bunnel.

Reviews the book "Profit Management and Control," by Fred V. Gardner.