The Accounting Review Vol. 27 No. 4 1952
TAX PRESSURES ON ACCOUNTING PRINCIPLES AND ACCOUNTANTS' INDEPENDENCE.
Abstract
The differences between taxable and business income are so numerous and important that the two concepts must be regarded as essentially different. These differences are in part "legalistic" and in part administrative, but more importantly they reflect basic differences in the objectives of the determination of taxable income and of business income. The divergencies are not likely to be resolved. Therefore it becomes necessary to abandon the postulate that taxable income should be determined "in accordance with the taxpayer's regular method of accounting." Attempts to maintain a fictional identity of the two concepts can only lead to political determination of business income, as tax pressures are too powerful to be resisted by accounting principle otherwise determined. Taxable income must be recognized as different from business income; accountants should resist efforts to prostitute accounting principles to tax ads; accountants' reports must be determined independently of tax considerations. Reports should include reconciliations of taxable and accounting income and necessary supplementary records should be maintained. Practicing accountants must carefully insulate' their position of independence in preparation of certified statements from the position of advocacy sometimes assumed in tax matters. Recognition of the basic differences in concepts, and differentiation of the two types of professional practice, are required for the maintenance of public confidence in accounting statements and accountants' reports.
- DOI
- 10.2308/tar-7086887
- Volume
- 27
- Issue
- 4
- Pages
- 419-426
- Language
- en
- Sources
- openalex crossref