Reviews the book "New Federal Estate Tax Regulations

The purpose of this article is to review some of the accounting principles effecting the equitable distribution and allocation of costs of a public utility corporation that furnishes electric, gas and steam services within the same general area. Its rate regulation comes under the jurisdiction of a State Public Service Commission, as all of its revenues and costs arise from within the borders of the state. In order to establish fair and reasonable rates for both utility and consumer alike, accounting principles pertaining to the distribution of costs must also be fair and reasonable. Total revenues in the long run must cover total costs. Costs must be matched against the revenues of the company for a particular period of time, usually on a monthly, quarterly or annual basis. The aim of the utility is to furnish service to its customers in the most efficient and economical manner possible and at the same time to earn a fair rate of return on its capital investment. Considerable judgment and care must be employed to choose the proper data and to select the best method of allocation in order to justify a cost distribution which will meet the standard of being fair and reasonable

The article evaluates the accounting provisions contained in the Ohio General Corporation Law. In addition to providing the authority for individuals to use the corporate device for the conduct of business, corporation statutes contain regulatory requirements designed to protect the rights and interests of investors. Regulation is necessary because the corporation is legally an entity apart from the creditors and owners who provide the capital with which it operates. Requirements relating to accountability and disclosure are a means of safeguarding rights of investors. The evaluation of the propriety of any legal requirement must be in terms of the public interest. Since the corporate form of organization is predicated upon an assumption of continuity, a permanent division between invested capital and earnings is necessary. It is in the public interest that the statutes recognize this distinction in the requirements relating to legal (stated) capital, surplus, dividends, and share acquisitions. In addition, these requirements must insure an accurate accountability and disclosure of those transactions, which affect the corporate equities

The article focuses on a comparative study of certain accounting institutions and practices in England and the U.S. The knowledge that the average accountant possesses of his profession is almost exclusively restricted to institutions, principles and procedures in his own country. The fact that relatively little research has been done on the subject of foreign accounting is cause for some concern. Areas of accounting and auditing in the U.S. and in England, which were selected for comparative study were: the legal position of the profession, codes of professional conduct, the professional examinations, professional education, objectives of auditing; and audit programs for inventory and for accounts receivable. An evaluation of major aspects of these areas concluded the study. In England, three methods have been adopted for admission into the professional accounting institutes: under articles of clerkship, under bylaws of institutes; and under the university scheme. In the U.S., admission to the practice of public accountancy is regulated by state law

Since the emergence of the tax allocation views of the Committee on Accounting Procedure of the American Institute of Certified Public Accountants and the lengthy and well-documented excoriation of the allocation proposition by the U.S. Securities and Exchange Commission (SEC) in Accounting Series Release No. 53, a good deal of attention in accounting literature has been given to the role of the corporate income tax provision in income determination. Despite the fact that tax allocation procedures have found a large measure of acceptance in practice and although the position of SEC has changed extensively, there remains considerable difference of opinion with respect to the basic nature of the tax deduction and how it should be viewed from the standpoint of income determination, statement presentation and disclosure, rate regulation, and financial analysis. Since the inception of corporate income taxes in the U.S., the legal view of the tax provision has frequently been a rather cursory one, and in practically every case the provision has been regarded in the nature of cost or expense

The article focuses on the influence of the U.S. Securities and Exchange Commission (SEC) upon the practice of auditing. The study has been confined to an examination of the liability provisions contained in the Federal Securities Acts of 1933 and 1934, the effect of governmental regulation on the accounting profession based on those acts; and an evaluation of the Commission's influence on auditing procedures, standards, certificates, and the personal conduct of accountants. The liability provisions included in the two acts were found to have been designed as precautionary measures and were not the result of auditing practices prior to 1933. Auditing standards appeared necessary to regain public confidence through the assurance that examinations by public accountants were up to a specified level of performance. Auditing standards prior to their requirement by the SEC were on an individual basis, and the need for a profession-wide adoption was apparent. A special committee appointed by the American Institute of Accountants proposed a set of standards, which was subsequently adopted. Early decisions of the Commission regarding audit certificates indicate the prevalence of faulty certificates accompanying SEC registrations