Use and Meaning of "Market" in Inventory Valuation - A CICA Research Study 1963

In January 1963, the Canadian Institute of Chartered Accountants (CICA) published the first in a long series of Research Studies. Prepared by Gertrude Mulcahy, FCA, it was called Use and Meaning of "Market" in Inventory Valuation.

The Foreword states: “While the practice of valuing inventories at "the lower of cost and market" has a long tradition behind it in Canada, relatively little has been specifically written about the use of the term "market", and the purpose and application of the concept, in valuing inventories in this country. The meaning of "cost" in inventory valuation has been covered in the Institute's Bulletin No.5; and there have been official pronouncements by the Institute of Chartered Accountants in England and Wales and by the American Institute of Certified Public Accountants on the use and meaning of "market". While this Research Study, as with all studies in this series, does not purport to represent an official Institute view, it represents an organized examination of this most important area by an author familiar with the background of Canadian business. It is to be hoped that this study will be the basis of much thought and discussion among accountants and other businessmen in Canada; and, probably in other countries as well.”

It goes on to acknowledge that “While the study reflects only the views of the author, Miss Mulcahy received valuable comments and assistance from the Toronto and Montreal members of the 1962-63 Committee on Accounting and Auditing Research, in particular from Mr. R. M. Skinner, F.C.A. who reviewed successive drafts of the study. I know she would want me to express her appreciation for this help.”

Approaches to Dealing with Risk and Uncertainty - 1990 CICA Research Report

The 1990 CICA Research Report, Approaches to Dealing with Risk and Uncertainty, was prepared by J.E. Boritz, PhD, FCA. He was assisted by an 8-member Advisory Group. This Research Report (about 160 pages) was developed in response to a recommendation in the Report of the Commission to Study the Public's Expectations of Audits (published in June 1988), commonly referred to as the Macdonald Commission Report.

The recommendation in  the Macdonald Commission Report stated that "the CICA should initiate and complete as soon as possible a study of risks and uncertainties leading to conclusions as to how they may best be disclosed in financial statements or elsewhere (e.g., in Management's Discussion and Analysis in the annual report)." Accordingly, the primary purpose of the Research Report is to discuss and summarize some of the key issues, and to recommend what further action should be taken.

A History of Ernst & Young

The roots of Ernst & Young go back to the 19th century and its founders Arthur Young and Alwin C. Ernst. Arthur Young was born in Glasgow, Scotland. He graduated in law, but became interested in banking and investment. In 1890, he moved to the US to pursue his career in accounting. In 1906, he formed an accounting firm, Arthur Young & Company, with his brother Stanley. Alwin C. Ernst was born in Cleveland, Ohio. After leaving school he worked as a bookkeeper. Then, in 1903, he and his brother Theodore started Ernst & Ernst, a small public accounting firm.

Young and Ernst were innovators and appreciated the importance of quality in their work. Ernst pioneered the idea that accounting information could be used to make business decisions. Young positioned himself as a business advisor. Both firms were also quick to enter the global marketplace. As early as 1924, they allied with prominent British firms: Young with Broads Paterson & Co. and Ernst with Whinney Smith & Whinney. These alliances were the first of many for both firms, which opened offices around the world to service their international clients.

Ernst and Young never met in life, but died within days of each other in 1948. Their philosophies lived on and, in 1989, were brought together when the firms they started combined to create Ernst & Young. The new organization quickly positioned itself on the leading edge of rapid globalization, new business technologies and continuous business change.

View the brief history and a timeline at the Ernst & Young Canada website.

A Future for the Accountancy Profession: The Quest for Closure and Integration, 1957-1970

In October 2001, the Institute of Chartered Accountants of Scotland (ICAS) published A Future for the Accountancy Profession: The Quest for Closure and Integration, 1957-1970 (339 pages). The Foreword, by Professor Andrew Christie, ICAS President, notes that: “On assuming the Presidency of ICAS in April 2001, there were a number of key strategic issues which the Institute had started to address. Firstly, the unrestricted use of the term ‘accountant.’ At a time when ICAS is increasingly regulating the activities of its members, there remains a population of ‘accountants’ whose work is unrestricted and who compete with qualified practitioners. Secondly, investigating how the Institute can become more relevant to the large number of its members who are not in practice but employed in industry and commerce. Thirdly, how to ensure that the governance of the Institute is designed to adequately represent the interests of chartered accountants in the diverse environments in which they work. Fourthly, maximising the use of modern communications to enhance the involvement of the membership in the formulation of policy.”

Christie goes on to say: “It is intriguing to discover from this monograph by Ken Shackleton and Stephen Walker that these issues were familiar to our forebears. The problem of how to define the ‘accountant’ in the context of the changing nature of the work performed by qualified accountants has surfaced as a problem during several attempts to draft legislation for the regulation of the profession. At the centre of the efforts to unify the professional organisations during the 1960s was the need to address the fact that while the chartered institutes were established as organisations for practising accountants, an increasing proportion of their members were engaged in other fields. The study reveals the potential difficulties in devising governance structures which are reactive to the changing interests and characteristics of institute memberships. Another key finding is the embarrassing consequences for the profession’s leaders of failing to listen to their own constituents.”

He concludes that “This monograph, emanating from the Institute’s Accounting History Committee, is an important contribution to our understanding of a formative event in the post-war history of the UK accountancy profession. The messages it conveys remain relevant today as the accountancy bodies continue to review their organisation.”