A Review of Bookkeeping and Accounting in 1945

A 1945 Vocational Guidance Film on Bookkeeping and Accounting is available for viewing online at the SEC Historical Society website. This entertaining 10-minute video was provided by courtesy of the Prelinger Archives, United States Library of Congress. It discusses a variety of matters including the household budget book, business bookkeeping, the role of the bookkeeper compared to that of the accountant, an accounting department, calculating and bookkeeping machines, cost accounting, special investigations, preparing tax returns and business principles. It also distinguishes a private accountant from a public accountant (such as a CPA) who should have a pleasing personality, a strong moral character and legible handwriting.

 

50 years ago in the October 1962 CAmagazine

The October 1962 edition of CAmagazine discussed the “Need for reform in the Bankruptcy Act.” It stated that: “Bankruptcies and their attendant losses have become a most pressing problem…. A tremendous volume of business is presently conducted in Canada by ‘thin’ corporations — where the shareholders have very little of their own money in the company. [One] might well remark that such a corporation should not be given credit…. Our present Bankruptcy Act … displays no recognition, whatsoever, of the need of a separate set of ‘ground rules’ in dealing with corporations.”

Also, read about the “60th Annual Conference” (from the summary of the CICA annual meeting in Fredericton, New Brunswick) and “The new management theories make for poor performance” (a summary of “Executives who can’t manage,” from The Atlantic Monthly, July 1962).

Andersen, Auditing and Atonement

Ten years ago, Arthur Andersen was forced to surrender its licences in the United States after the Enron scandal, precipitating its global collapse. December 2011 marked 10 years since Enron, the Texas energy company, filed for bankruptcy after perpetrating one of the world's biggest business frauds. More significantly for the accounting profession, May 2012 marks a decade since the Enron indictment in the United States, and the beginning of the end for the well-respected Arthur Andersen, one of what was then the Big Five accounting firms.

The firm was convicted of obstructing justice by destroying thousands of documents related to its work for Enron. While the ruling was overturned in 2005 on technical grounds, it came too late to resuscitate the brand. For the profession, the scandal drew wide scrutiny on the supposed compromised position of large firms that audit the books of clients to whom they also provide consultancy services.

For a look back on the past decade of reactions, reforms and soul-searching in the accounting profession, read the article “ANDERSEN, AUDITING AND ATONEMENT: The accounting profession 10 years after Enron” by George W. Russell at GAA Accounting online.

AICPA 125th Anniversary: Overcoming Challenges

The American Institute of Certified Public Accountants (AICPA) celebrates its 125^th anniversary in 2012. Founded in 1887, the AICPA is the national professional organization of Certified Public Accountants (CPAs) in the United States, with more than 350,000 CPA members in 128 countries in business and industry, public practice, government and education. It sets ethical standards for the profession and auditing standards for audits of private companies, non-profit organizations, federal, state and local governments. The AICPA’s founding established accountancy as a profession distinguished by rigorous educational requirements, high professional standards, a strict code of professional ethics, and a commitment to serving the public interest.

According to the AICPA Insights blog, the history of the profession includes a long tradition of successfully overcoming challenges. “Throughout our nearly 125 years, we have been a proactive profession that seeks out opportunities for growth and improvement. The latest example is CPA Horizons 2025, a landmark project that continues the valuable work of the profession’s Vision Process in the late 1990s and charts a course for the profession over the next 15 years. Among other key areas, Horizons 2025 focused on the increasing impact that technology will have on our world and on our profession. Since technology can automate so many of the tasks that we perform, it has allowed us to raise our game and reinforce our roles as trusted business advisors.”

In celebration of its 125th anniversary, the AICPA will highlight the CPA profession’s financial literacy expertise in a consumer-focused book. The book content will be a collection of personal essays showcasing the many ways CPAs transform financial lives. In this regard, the AICPA is looking for real-world saving and spending stories and tales of both money struggles and triumph to help families get a handle on their finances and teach good habits to children. The goal is to publish the book in the same style as the Chicken Soup for the Soul series in Fall 2012. That will coincide with the AICPA’s 125th anniversary and take advantage of the moment to highlight the CPA profession in the public. This book will be the AICPA’s first consumer publication and the first book published as part of the “360 Degrees of Financial Literacy” program.

A brief history of the ACCA

The Association of Chartered Certified Accountants (ACCA) is the global body for professional accountants with 147,000 members and 424,000 students in over 170 countries. It also has a network of 83 offices and centres across the world.

In 1904, eight people formed the London Association of Accountants. Their aim was to provide more open access to the accountancy profession than the two existing accountancy organizations. ACCA went through a number of mergers and amalgamations over the years. In 1984, it became the Chartered Association of Certified Accountants to reflect the fact that it had been granted a Royal Charter of Incorporation. In 1996, it began to use the current name, the Association of Chartered Certified Accountants.

For a brief history of the ACCA from 1904 to the present time, refer to the ACCA website section on "Our History."

The Official Duties of Chartered Accountants - 1891

A lecture called “The Official Duties of Chartered Accountants” was read before the Manchester Chartered Accountants' Students' Society on May 4, 1891. According to that lecture, the duties of a Chartered Accountant may be divided into three classes: Private, Public, and Official.

“By private duties I mean such as are due by a Chartered Accountant to his client when he is instructed to perform an audit or an investigation on behalf of a private association, a firm, or on behalf of individuals, either in their business or private capacity. His duty is then strictly confined to carrying out the instructions of his clients to the best of his professional skill and ability; when he has performed these his responsibilities are at an end.”

“The public duties of a Chartered Accountant have reference to those cases where he acts on behalf of persons who give him general but not definite instructions, and who leave him to carry them out according to his own ideas, in the full belief that he will do his duty in the interest of all concerned, and hold him responsible for so acting. These duties are such as are undertaken by accepting the appointment of Auditor of a public company, of voluntary Liquidator of a company, of Auditor of the accounts of a deceased person's estate on behalf of those interested, either in the division of the estate or in the income derived from investment of the same, and of an Arbitrator, while the official duties are those appertaining to offices or appointments held under the Courts of Justice, whether of the Chancery Division or the Queen's Bench Division of the High Court of Justice, or under the County Courts, and under the Board of Trade.”

“It is with the last class of duties that my lecture is concerned. The appointments under the Chancery Division of the High Court of Justice are those of Receiver, Receiver and Manager, Provisional Liquidator, Voluntary Liquidator under supervision of the Court, and Liquidator; the appointment under the control of the Queen's Bench Division of the High Court of Justice is that of Trustee in Bankruptcy. Under the Board of Trade, a Chartered Accountant may receive the special appointment as a skilled Accountant to assist a debtor against whom a Receiving Order under the Bankruptcy Act of 1883 has been made, in the preparation of his statement of affairs, and also to assist the directors or other officials of a company, after an order for winding it up has been made by the Court, in the preparation of a statement of affairs. He may also be appointed the Special Manager of the business of a debtor from the date of the Receiving Order until the appointment of, or rather certification of, a Trustee, or the approval of a scheme, and also the Special Manager of a company after a Winding-up Order has been made by the Court.”

(The full lecture about “The Official Duties of Chartered Accountants - 1891” is available online at Google Docs.)

A History of the AICPA and Volunteer Committees

The American Institute of Certified Public Accountants (AICPA) and its predecessors have a history dating back to 1887, when the American Association of Public Accountants (AAPA) was formed.  In 1916, the American Association was succeeded by the Institute of Public Accountants, at which time there was a membership of 1,150. The name was changed to the American Institute of Accountants in 1917 and remained so until 1957, when it changed to its current name of the American Institute of Certified Public Accountants. The American Society of Certified Public Accountants was formed in 1921 and acted as a federation of state societies. The Society was merged into the Institute in 1936 and, at that time, the Institute agreed to restrict its future members to CPAs.

The use of committees began even before the AAPA was formed in 1887.  At the first meeting of what would become the AAPA on December 22, 1886, those present authorized the appointment of a committee to draft rules and regulations.  Beyond this first preliminary committee, the first Bylaws of the AAPA in 1897 established three committees: Finance and Audit Committee, Committee on Elections, Qualifications and Examinations, and the Committee on Bylaws.  The number of committees grew continually over the years.

(For more information, see the AICPA website section on History of AICPA Volunteering.)

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.”

Meeting the Challenge of Change – Report of the CICA Long-Range Strategic Planning Committee (1986)

A 1986 report by the Canadian Institute of Chartered Accountants (CICA) states (on page 5): “The Canadian CA profession - like the accounting profession worldwide - is facing fundamental and pervasive change. Led primarily by the rapidly evolving information technology that is revolutionizing business operations, but due also to altered perceptions about the value of the traditional attest audit, the role of chartered accountants in society - whatever their area of practice - is changing dramatically. CAs in public practice face new and increasing demands from their clients for services extending beyond those related to historical financial information and income tax advice and toward future-oriented information necessary for economic decision making. In the process, the CAs role is expanding from that of reporter and analyst of past events to communicator and adviser about business information affecting the future.”

The report further states: “CAs outside public practice - those in industry and government, for example - are no less subject to these demands, albeit from their employers. And CAs in education must face the challenging task of educating the profession's future members to meet this challenge. In an effort to manage change and provide strategic directions for our profession, the CICA Board of Governors formed the Long-Range Strategic Planning Committee in February 1984. Over the past two years, our assessment of these changes, via member and user surveys, focus groups, committee research, literature review and presentations at CICA and provincial institute conferences, has led us to develop an exciting vision of what the CA profession might become over the next 10 to 20 years. It is a vision of a more broadly-based profession whose highly-skilled members are the recognized experts in meeting the needs of an information society.”

The Committee’s conclusions are summarized in a mission statement and 14 specific strategic proposals. These proposals and the overall strategic direction are interrelated and should be looked on as a total concept. To learn more, read Meeting the Challenge of Change – Report of the CICA Long-Range Strategic Planning Committee (1986). Because of its multi-coloured front cover, it is commonly referred to as the “Rainbow Report.”

History of the FATF (1990-2010)

In response to mounting concern over money laundering, the Financial Action Task Force on Money Laundering (FATF) was established by the G-7 Summit that was held in Paris in 1989.

Recognizing the threat posed to the banking system and to financial institutions, the G-7 Heads of State or Government and President of the European Commission convened the Task Force from the G-7 member States, the European Commission and eight other countries.

The Task Force was given the responsibility of examining money laundering techniques and trends, reviewing the action which had already been taken at a national or international level, and setting out the measures that still needed to be taken to combat money laundering. In April 1990, less than one year after its creation, the FATF issued a report containing a set of Forty Recommendations, which provide a comprehensive plan of action needed to fight against money laundering.

In 2001, the development of standards in the fight against terrorist financing was added to the mission of the FATF. In October 2001, the FATF issued the Eight Special Recommendations to deal with the issue of terrorist financing. The continued evolution of money laundering techniques led the FATF to revise the FATF standards comprehensively in June 2003. In October 2004, the FATF published a Ninth Special Recommendation, further strengthening the agreed international standards for combating money laundering and terrorist financing - the 40+9 Recommendations.

To learn more, read the publication 20 Years of the FATF Recommendations 1990-2010.

Historical Notes on the Accounting Hall of Fame

Election to the Accounting Hall of Fame is perhaps the only longstanding national award for accountants -- and probably the only international one as well -- in which both academic and practicing accountants vie for the same award. The Accounting Hall of Fame was established at The Ohio State University in 1950 for the purpose of honoring accountants who have made or are making significant contributions to the advancement of accounting since the beginning of the twentieth century. Through 2008, 85 leading accountants from the United States and other countries have been elected to the Hall of Fame.

While selection to the Hall of Fame is intended to honor the people so chosen, it is also intended to be a recognition of distinguished service contributions to the progress of accounting in any of its various fields. Evidence of such service includes contributions to accounting research and literature, significant service to professional accounting organizations, wide recognition as an authority in some field of accounting, advancement of accounting education, and public service. A member must have reached a position of eminence from which the nature of his or her contributions may be judged.

Canadian income tax, then and now

It has been almost 40 years since Canada overhauled its tax system, eliminating estate duties and bringing in capital gains tax. Since 1972, we have seen no less than 49 editions of the Income Tax Act. Its length has increased enormously and the complexity exponentially. Changes in technology have aided the Canada Revenue Agency in the selection and audit of taxpayers. Ever-changing legislation, powerful audit tools, information exchange agreements and anti-avoidance rules have made tax planning harder, tax compliance more challenging and tax enforcement easier with key changes over the past 40 years and challenges presented to the accounting profession. (Read the article “Income tax, then and now” in the June-July 2011 issue of CAmagazine online.)

ICAS - more than 30 years of dedicated research

The Institute of Chartered Accountants of Scotland (ICAS) is the world’s first professional body of accountants, receiving its Royal Charter in 1854. It was the first to adopt the designation “Chartered Accountant” and the letters CA. The ICAS is committed to supporting and encouraging high quality research that is timely, relevant and useful to the accounting profession in an international or UK perspective. Research is funded by The Scottish Accountancy Trust for Education and Research (SATER), which focuses on research that is relevant to the public interest and the accountancy profession or business. To encourage dissemination of research findings, a Publications Catalogue and the majority of Research Publications (containing research dating back to 1982) are available to download free-of-charge from the ICAS website. To be notified of new research publications, interested parties can subscribe to an e-news service by e-mail (research@icas.org.uk).

PricewaterhouseCoopers - A Firm History

PricewaterhouseCoopers (PwC), one of the world’s largest accountancy firms, was created in 1998 through the merger of two firms, Price Waterhouse and Coopers & Lybrand. Each firm has historical roots going back about 150 years to 19th century Great Britain (explore PwC's First 100 Years in Canada). The collection of PwC archival materials, donated to Columbia University in August 2000, traces the rise of both firms to become major worldwide professional services powerhouses through mergers and business expansion. To learn more about these extensive archives, visit the Archival Collections at the Columbia University (in the City of New York) Rare Book and Manuscript Library online. The Archival Collections provide access to descriptions and finding aids for more than 3,500 archival collections in six Columbia University Libraries repositories. These collections include personal papers, institutional records, corporate archives, architectural drawings and much more.

A Day of Recognition and Celebration for Quebec Chartered Accountants

This year marks the 75th anniversary of the Quebec City CA Group and the 130th anniversary of the Ordre des comptables agréés du Québec (OCAQ). A day of activities under the theme "Active capital for your success!" was held in Quebec City on September 30, 2010 to celebrate these two important milestones for Quebec CAs. Read the OCAQ News Release and view the Photo Album online.

Institute of Chartered Accountants of British Columbia - Centenary Website

The Institute of Chartered Accountants of British Columbia (ICABC) celebrated its 100th anniversary in 2005. It was marked with events, articles in Beyond Numbers, Centenary Artwork, an online timeline of the history of CAs in BC, and a calendar. An expanded look at these contributions is provided on the ICABC centenary website which describes the people and events that have shaped the profession in BC.

Institute of Chartered Accountants of Ontario - Innovation and Historical Milestones

There are approximately 72,000 Chartered Accountants (CAs) in Canada. Nearly half (33,000) are Ontario CAs. CAs work in large and small businesses, in government and in public accounting, in the not-for-profit sector, and as professors and teachers - at home and around the world. The year 2010 marks the 131st year of the CA designation in Ontario. From the province's origins as an agricultural society to its emergence as an economic powerhouse, CAs have played a key role in shaping Ontario’s progress. Our history bridges all the major milestones… the great waves of immigration of the early 1900s, the harnessing of Niagara Falls, the birth of Ontario Hydro, the First and Second World Wars... the huge building booms of the 1950s and 1960s, and the signing of the Auto Pact, the Free Trade Agreement and NAFTA. To learn more about CA Innovation since 1879,  Historical Milestones and the 125th anniversary in 2004, visit the website of the Institute of Chartered Accountants of Ontario (ICAO).

A History of KPMG in Canada

In Canada, KPMG's roots date back to 1840. Since that date, more than 115 firms in communities across Canada have joined forces to create KPMG. Each of these has played a vital role in the growth of KPMG in Canada. For an overview of predecessor firms Thorne Riddell, Ernst & Whinney, Stevenson Kellogg Ernst & Whinney, and Peat Marwick, visit the KPMG Canada website. (A history of KPMG International dating from 1897 is also available online.)

A History of BDO Canada LLP

BDO Canada LLP is both new and old on the scene. In January 1992, the Canadian accounting firms, Dunwoody & Company and BDO Ward Mallette ― each with approximately 70 years of history ― merged with BDO Guenette Chaput in Winnipeg and BDO Frazer Matthews in Edmonton to form one unified firm. Formerly known as BDO Dunwoody, the Canadian member firm of BDO International changed its name again in 2010 with the rest of BDO’s firms around the world to become known as, simply, BDO. (Read about the history of Dunwoody & Company and BDO Ward Mallette on the BDO Canada LLP website.)