Principles before standards. The ICAEW's ‘N Series’ of recommendations on accounting principles 1942

This paper discusses the circumstances in which the Accounting Principles Board (APB) issued Opinions 3 and 19, in 1963 and 1971, respectively, when the Board encouraged and then required companies to publish a statement of source and application of funds, known as the funds statement. In doing so, the Board both times lagged behind company practice and the views of influential organizations, including the New York Stock Exchange and the Securities and Exchange Commission.

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THE WORK OF THE SPECIAL COMMITTEE ON RESEARCH PROGRAM

Accounting Historians Journal ◽

10.2308/0148-4184.28.2.141 ◽

2001 ◽

Vol 28 (2) ◽

pp. 141-186 ◽

Cited By ~ 12

Author(s):

Stephen A. Zeff

Keyword(s):

Research Program ◽

Special Committee ◽

Accounting Firms ◽

Accounting Research ◽

Research Division ◽

Accounting Principles ◽

The Creation ◽

Big Eight ◽

Accounting Procedure

This article begins by recounting the circumstances that led to the AICPA's decision in 1957 to appoint a special committee to recommend a stronger research program to support the process of establishing accounting principles. It then proceeds to examine in depth the committee's sometimes difficult deliberations that eventually led to a unanimous report, in which it recommended the creation of an Accounting Principles Board and an enlarged accounting research division within the Institute. In the course of the article, the author brings out the strong philosophical differences among several of the Big Eight accounting firms that had been impeding the work of the Committee on Accounting Procedure and that also intruded into the Special Committee's deliberations.

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SAMUEL J. BROADS CONTRIBUTIONS TO THE ACCOUNTING PROFESSION

Accounting Historians Journal ◽

10.2308/0148-4184.23.2.69 ◽

1996 ◽

Vol 23 (2) ◽

pp. 69-85 ◽

Cited By ~ 7

Author(s):

Gary John Previts ◽

Thomas R. Robinson

Keyword(s):

Self Regulation ◽

Accounting Profession ◽

General Acceptance ◽

Accounting Principles ◽

The Individual ◽

Securities Laws ◽

Analogous Reasoning ◽

Independent Audit ◽

Selection Of

In the decade following the passage of the Federal Securities Laws of 1933 and 1934, the reform of accounting and auditing practices directed authority for selection of accounting principles and auditing procedures away from the discretion of the individual accountant and auditor. Instead, a self-regulatory peer driven process to establish general acceptance for a more limited set of principles and procedures was being initiated. Two events which occurred in 1938 indelibly affected this process, the SEC's decision to issue Accounting Series Release No. 4, which empowered non-governmental entities as potential sources of authoritative support, and the McKesson & Robbins fraud which called into question the value of the independent audit and the role of external auditing at the very time a momentum had been established for self-regulation by the nascent and recently reunified accounting profession. The contributions of Samuel J. Broad in both the initiatives for self-regulation of accounting principles and of auditing procedures is examined in this paper. Further, several examples of Broad's rhetorical technique of employing analogous reasoning to facilitate dissemination of complex economic and accounting issues are examined.

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THE SEC PREEMPTS THE ACCOUNTING PRINCIPLES BOARD IN 1965: THE CLASSIFICATION OF THE DEFERRED TAX CREDIT RELATING TO INSTALLMENT SALES

Accounting Historians Journal ◽

10.2308/0148-4184.34.1.1 ◽

2007 ◽

Vol 34 (1) ◽

pp. 1-23 ◽

Cited By ~ 9

Author(s):

Stephen A. Zeff

Keyword(s):

Securities And Exchange Commission ◽

Accounting Practice ◽

Slow Pace ◽

Accounting Principles ◽

Private And Public ◽

Deferred Tax ◽

Accounting Procedure ◽

The U.S ◽

Do So

In 1959, the Accounting Principles Board (APB) replaced the Committee on Accounting Procedure because the latter was unable to deal forthrightly with a series of important issues. But during the APB's first half-dozen years, its record of achievement was no more impressive than its predecessor's. The chairman of the Securities and Exchange Commission (SEC), Manuel F. Cohen, criticized the APB's slow pace and unwillingness to tackle difficult issues. This article discusses the circumstances attending the SEC's issuance of an Accounting Series Release in late 1965 to demonstrate forcefully to the APB that, when it is unable to carry out its responsibility to “narrow the areas of difference” in accounting practice, the SEC is prepared to step in and do so itself. In this sense, the article deals with the tensions between the private and public sectors in the establishment of accounting principles in the U.S. during the mid-1960s. The article makes extensive use of primary resource materials in the author's personal archive, which have not been used previously in published work.

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An Exploratory Study of the Valuation Properties of Cross-Listed Firms' IAS and U.S. GAAP Earnings and Book Values

The Accounting Review ◽

10.2308/accr.2002.77.1.107 ◽

2002 ◽

Vol 77 (1) ◽

pp. 107-126 ◽

Cited By ~ 78

Author(s):

Hollis Ashbaugh ◽

Per Olsson

Keyword(s):

Exploratory Study ◽

Accounting Standards ◽

Equity Market ◽

Residual Income ◽

International Accounting Standards ◽

Generally Accepted Accounting Principles ◽

Listed Firms ◽

Valuation Model ◽

Accounting Principles ◽

Book Values

Despite the increasing integration of global capital markets, there is little evidence on the valuation properties of cross-listed, non-U.S. firms' accounting variables. We use the relative performance of the earnings capitalization, the book value, and the residual income valuation models to explore the valuation properties of International Accounting Standards and U.S. Generally Accepted Accounting Principles earnings and book values reported by non-U.S., cross-listed firms trading in a common equity market. Using non-U.S./non-U.K. firms whose shares trade on the International Stock Exchange Automated Quotation system in London, we find that the earnings capitalization model is the dominant accounting-based valuation model when crosslisted firms report under International Accounting Standards. In contrast, we find that when cross-listed firms report under U.S. Generally Accepted Accounting Principles, the residual income model is the dominant accountingbased valuation model. Our exploratory study provides insights into the valuation implications of allowing a dual reporting system for foreign registrants trading in a common equity market.

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Does Auditor Explanatory Language in Unqualified Audit Reports Indicate Increased Financial Misstatement Risk?

The Accounting Review ◽

10.2308/accr-50836 ◽

2014 ◽

Vol 89 (6) ◽

pp. 2115-2149 ◽

Cited By ~ 54

Author(s):

Keith Czerney ◽

Jaime J. Schmidt ◽

Anne M. Thompson

Keyword(s):

Financial Reporting ◽

Reporting Quality ◽

Positive Association ◽

Financial Statements ◽

Financial Statement ◽

Financial Reporting Quality ◽

Accounting Principles ◽

Client Relationship ◽

Financial Misstatement ◽

Audit Reports

ABSTRACT According to auditing standards, explanatory language added at the auditor's discretion to unqualified audit reports should not indicate increased financial misstatement risk. However, an auditor is unlikely to add language that would strain the auditor-client relationship absent concerns about the client's financial statements. Using a sample of 30,825 financial statements issued with unqualified audit opinions during 2000–2009, we find that financial statements with audit reports containing explanatory language are significantly more likely to be subsequently restated than financial statements without such language. We find that this positive association is driven by language that references the division of responsibility for performance of the audit, adoption of new accounting principles, and previous restatements. In addition, we find that (1) “emphasis of matter” language that discusses mergers, related-party transactions, and management's use of estimates predicts restatements related to these matters, and that (2) the financial statement accounts noted in the explanatory language typically correspond to the accounts subsequently restated. In sum, our results suggest that present-day audit reports communicate some information about financial reporting quality.

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