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On June 30, 1993, the Financial Accounting Standards Board issued an exposure draft, Accounting for Stock-Based Compensation, that has aroused considerable controversy. (See "FASB Issues Proposal on Stock Option Compensation," [...]

It's time to see whether FASB rules really do the job. There comes a time for any set of rules when a thorough in-depth review is appropriate and necessary. For [...]

The current debate over stock options may be a matter of inverse reasoning. It seems to have begun with a conclusion that stock options should be expensed. Having reached that [...]

In your Aug. 20-Sept. 2, 2001 issue, Miller and Bahnson gloat about their 1996 opinion on the subject of stock compensation. There surely are sufficient reasons to conclude that some [...]

IN SEARCH OF ELDORADO The FASB's quest for technical purity may be a quest for the impossible. Many years ago, as a boy, I was housebound for some reason. For [...]

I have read with interest the original comments by Professor Abraham Briloff concerning his peer review, as well as later letters to the editor and a commentary by my friend [...]

Discusses several issues related to accounting practice. Details of the discussion group of the Institute of Chartered Accountants of Ontario; Suggestions on cost control measures and improvement in office procedures in accounting firms; Tips for a college graduate who is starting out in public accounting.

Discusses some issues related to accounting practice in the United States. Information on some societies of accountants; Factors which determine the success of accounting firms; Characteristics of a good manager in an accounting firm.

Describes how a seminar is used to gain company-wide cooperation on an engagement. Development and employment of seminars at Brigode & Associates Inc.; Use of the direct cost management seminar to explain the workings of a direct cost system; Benefits of using the direct cost margin sheets.

Presents several narratives describing the personal experiences of accountants in the U.S. Failure of some clients to use management control methods, which were fundamental; Manner in which retired accountants can render a valuable service to Accountants for the Public Interest, a volunteer based accounting organization; Suggestions on the way accountants can improve their productivity.

Provides information on the views of several accounting practitioners on various accounting-related issues. List of the seven deadly sins of professional advisers and their clients as published in the last part of the article "Rate Yourself as a Client," by Anthony Ray; Question raised by Dean Choler, certified public accountant (CPA) at Silvertrust, Cohler, Chulock & Hersh, regarding the 1976 Revenue Act; Suggestion of CPA Betty T. McGill , on some things retired CPA can do.

This article presents an update on issues related to accounting practice in the United States as of December 1977. In many firms, the partner retreat has become the most important single activity. It is the activity that provides an opportunity to put everything in perspective. The most important method of ensuring effective planning at the partners' retreat is the advance preparation. This should involve the development of all possible financial and statistical information in the firm's accounting and reporting system. Every competent CPA recommends that his clients have some form of long-range plan. He recommends that financial statements be used not only in a historical reporting sense, but as a basis for carefully considering the future. These same recommendations are doubly important for the effective conduct of a CPA practice.

This articles focuses on the strategies and techniques in effectively managing one's boss. It is understood that bosses are: (1) human beings like everyone else; (2) they are not mind readers even if they are able and competent; (3) they don't give much of their time on their subordinates; and (4) they are dangerous to underrate than to overrate. Furthermore, it is important to recognize the character and mannerisms of one's boss. The article further suggests ways in conducting effective relationship and communication with one's superior. Moreover, it is better to have done one's tasks and preparation before confronting one's boss with certain dilemma or issue. Finally, no matter what kind of position and work, there are always bosses that will held oneself accountable.

Focuses on several practices relating to accounting. Purpose of the Statement on Auditing Standards number 6, Related Party Transactions; Relationship between the deduction for moving expenses and a related gain on sale of a personal residence; Characteristics of a managing partner.

Presents letters to the editor referencing articles and topics discussed in previous issues. List of legal factors that should be considered in evaluating the purchase of a small business; Overview of a firm's successful recruiting program; Techniques for improving staff scheduling in an accounting firm.

This article discusses the new approach on the systematic approach in providing public professional accounting services to individual small businesses and nonprofit organization with limited funds. The article presented that in 1971, the Accounting Aid Society of Metropolitan Detroit (AASMD) was organized to provide and coordinate volunteer accounting services to individuals, small business and nonprofit organizations. The article presented the structure of the management groups of the AASMD whose primary function is to monitor the educational experience of students and lead informal seminars on various accounting related topics. The article also presented the analysis of the impact of the AASMD assistance.

Addresses several issues concerning the management advisory services (MAS) being offered in accounting firms across the U.S. as of September 1976. Attitude of accounting firms in several states concerning MAS; Significance of a partnership between an accounting firm and a MAS firm; Benefits that can be gained by clients as a result of the firms' partnership.

The article offers an insight into the challenges posed by the proliferation of minicomputers to accountants in the U.S. Failure to react to the computer's potential as an accounting and management tool can cause an accountant to relegate himself to a much lesser role in financial information processing. One distinction for accountants should be made between using the computer for problem solving and using the computer to accomplish systems data processing. Accountants must learn how to perform such functions as surveying client information needs, feasibility of electronic data processing for a particular client and implementing the system and training personnel to operate it.

Presents several news briefs related to the practice of accounting in the United States. Discussion on income taxes and investment credits; Application of last-in-last-out method for small businesses; Relation of auditors with their clients.

This article discusses the appointment of the Board of Standards for Programs and Schools of Professional Accounting for the American Institute of Certified Public Accountants in July 1974. In considering the educational needs of the profession, the board members recognized that in the total range of accounting activities some components of the profession have evolved more than others. Yet, as the body of accounting knowledge increases and the social significance and ethical imperatives of accountancy become clearer, the profession will continue to mature. Hence, the term accountant, like the term engineer, has been appropriated by many whose level of work corresponds to that of para-professionals. The basic consideration, however, is to develop educational programs of a professional nature for those accountants whose career aspirations require the highest degree of expertise. However, consideration should also be given to professional programs at the postbaccalaureate level. At this level professionalization may be most feasible, and it is to this level that the educational programs of the traditional learned professions have evolved. Thus, in determining whether this objective is being met, it is necessary to consider the environmental conditions and standards of quality maintained by schools.

Presents updates on issues and events related to accounting practices in the U.S. as of May 1976. Activities of a conservation group of certified public accountants in San Francisco, California; Factors to be considered in the evaluation of a certified public accountant firm by a client; Ways of dealing with errors in financial reports.

This section presents flowcharts of major provisions of the U.S. Employee Retirement Income Security Act of 1974 or the Pension Reform Act of 1974.

Focuses on issues related to accounting practice. Tips on managing an accounting firm; Problems which arise in accounting for puts and calls.

This article presents several newsitems related to accounting practice in the United States. Studies show that Lifo (lat in, first out), an accounting method, may have a very substantial impact on the earnings, net worth or liquidity of a small business or of the owners of that business. The accounting and reporting aspects of a Lifo decision must be carefully considered. If Lifo is elected for tax purposes, it must also be used in financial statements. With adequate disclosure in financial statements, the small business client should be able to deal effectively with most accounting and financial reporting problems resulting from a Lifo election. Norman S. Rachlin, of Rachlin & Company, Coral Gables, Florida, won Witte Award for the year 1975 for his article "Evaluating and Rewarding Partners," which was published in the February 1975 Practitioners Forum. The award, given annually by the Lester Witte Foundation, was formally presented at the AICPA (American Institute of Certified Public Accountants) annual meeting in San Antonio in October 1975. The award consists of a $100 cash prize and an appropriately inscribed plaque.

The article provides a checklist that can help auditors review internal control for both audited and unaudited engagements. It offers some auditing procedures which, when employed, may arouse the curiosity of the auditor and enhance his awareness of the possibility that fraud may exist. Selected auditing procedures, which can help detect and minimize irregularities, which consist of intentional distortions of financial statements and defalcation, are discussed. It also describes some accounting irregularities commonly found by auditors.

Presents a list of publication on accounting which can serve as a reference source for accountants.

This section presents comments on issues related to accounting practice in the U.S. In his comment on the article in the November 1973 Practitioners Forum by Frank Collins on choosing the best health and accident policy, Charles W Laue has this to say: It seems to me that the author over-looked two important points. He does a good job of preparing the benefits of the three policies, but what about the companies behind the policies? Some have excellent reputations with fast and courteous claims service; others do not. Some are "old-line, legal reserve companies" that have been in the business a long time and have a stable rate structure. Others are new in the business and small enough that the bad year would have an unfavorable effect upon rates. As professionals, we should be willing to seek the advice of other professionals in those areas where our competence is limited. Too few of us are aware of the service that the professional insurance man, the chartered life underwriter (CLU), can render. Insurance is such a vast varied field that a CLU can be a big help in sorting out the coverages available and helping to choose the right coverage for the right company. In another issue, Robert E. Hamilton designed a flowchart on Statement on Auditing Procedure No. 38, which appeared in the September 1969 issue. This chart received such favorable comment that I wondered why this technique has not been used more extensively. And now Dan M. Guy, CPA, Texas Tech University, Lubbock, has prepared similar flowcharts on SAP Nos. 41, 42, 45, 46 and 50 with references to Statement on Auditing Standards No. 1. Several of our contributing editors wondered why such flowcharts are not prepared by the AICPA auditing standards executive committee.

This article comments on various issues on the accounting principles in the U.S. In the December 1972 article Unaudited Financial Statements: A Cloud of Dissent?, Betty McGill expresses the fear that certified public accountant who do not practice in the world of publicly held corporations will no longer be able to provide accounting reports tailored to the less complicated needs of their clients. The article also presented the opinion of Peter Arnstein, who wrote that applying Accounting Principles Board (APB) Opinions to reporting for closely held clients causes more and more time to be spent developing information which is of no significance or benefit to anyone. However, James H. Naus pointed out that any trend toward creating two classes of financial reporting or accounting by exempting nonpublic corporations from Accounting Principle Board (APB) or Financial Accounting Standards Board Opinions should be resisted. This resistance may be based on three factors which are as practical as they are theoretical. These factors are the generally healthful effect of APB Opinions already issued, the recognition of the environment in which the certified public accountant performs when dealing with small businesses and the awareness of the total economic environment in which all businesses operate.

This article focuses on the evaluation of practitioners in accounting firms. The authors after considering the subject from time to time, they finally developed a list of responsibilities against which partner performance could be measured. At first this list was used to help sharpen the thinking of authors about areas of responsibility and after some time they began to think about using it for partner evaluation. The authors considered the idea of having each partner evaluate each of the other partners, with the evaluation sheets to be sent to an outside party who would summarize the results and return them to the authors for discussion. Mutual audit and professional development counseling as a method of evaluating partners are also discussed in the article.

The article presents updates on issues and events related to the accounting profession. The 10th International Congress was held in Sydney, New South Wales in October 1972. Some of the topics addressed at the congress were: ascertainment of periodic financial results; bases of accounting other than historical cost; information for management; the audit report and information for proprietors and others. E. John Larsen, associate professor of accounting at the University of Southern California in Los Angeles claims that when consulting with accounting firms he is often astounded by the poor writing among younger staff members.

Letters to the editor are presented regarding various issues in the accounting profession in the United States. These include: a narrative by Richard Vangermeersch, assistant professor at the University of Rhode Island, on how he explained the nature of the accounting profession to a seven-year-old child; a method developed by J. R. Randall for his firm to simplify the auditing process and minimize staff time; the reply of John B. Sperry to a letter in response to his article "A New Dimension in Introductory Accounting," in the March 1972 issue of the "Virginia Accountant"; and Betty T. McGill's response to John Burton, Chief Accountant for the Securities and Exchange Commission on the issue of unaudited financial statements.

Provides an update on concerns of accountants related to their accounting practices in the U.S. as of March 1973. Ways to ensure the implementation of changes suggested by management letters; Impact of the computer on small accounting firms; Services provided by certified public accountants.

The purpose of this article is to present the characteristics which should be considered basic to an agreement to transfer an accounting practice. The agreement includes a statement that the seller desires to transfer all or part of his practice to the purchaser, and that the purchaser desires to acquire all or part of the seller's practice. The agreement contains the amount and date of each payment, the time period the payments are to be made, and the interest rate if one is charged. The agreement includes the warranties or guarantees of the seller.

This article focuses on several debates on accountancy. One of the debates talked about the demise of family-held businesses. There are several reasons why family-owned business fall by the second generation. One of reasons for the failure is caused by unqualified family members filling positions in the company. Another debate was about appraisal values. The most obvious way to obtain fairmarket value is to have an appraisal. Many, if not most, business entities are already having periodic appraisals for insurance and/or other purposes. Thus it is felt that no significant additional burden is being placed on the entity.

This sections recommends several books and reference materials about accounting and auditing.

This section reprints the article What Is on-the-Job Training by Peter King, which appeared in the January 1971 issue of the Chartered Accountant in Australia. With the introduction of higher educational standards at the matriculation level and the increasing number of university graduates being attracted to the profession, practitioners are having greater demands placed on their staff training programmes than ever before. As these people joining the profession are considerably better educated and more mature than their counterparts of a decade ago, it is essential that we obtain and build upon their initial interest in the profession and train them to become enthusiastic and efficient members of our staffs as quickly as possible. Thus, many firms conduct formal staff training programmes either on an internal basis or through courses being conducted by the Institute and other educational bodies.

The article focuses on public accounting issues in the United States. An accountant's report is specifically leisured only with respect to statements of past operating results and financial position, but accountants normally are requested by boards of directors to satisfy themselves that directors' forecasts have been prepared on a reasonable basis. The client's procedures are being followed and are adequate to insure the proper accumulation, recording and disbursing of payroll. Preprinted audit programs designed for all clients are a poor substitute for a program designed on a client by client basis. For example, the payroll and purchasing data, where applicable, can be traced to the job cost cards to test the accumulation of job costs upon which the auditor may rely for his valuation of inventory. In cases where subsidiary ledgers of accounts receivable or accounts payable are not in use, the steps for retracing of posting to subsidiary-ledger would not apply, but instead the auditor could examine the collection copy of the sales invoice noting that it is stamped paid and date thereof.

Presents an update on issues concerning the accounting profession in the U.S. as of January 1971. Advantages and disadvantages of using computers in the preparation of tax returns; Signs of organized crime; Equipment for handling memos efficiently.

This article deals with the applications for computer time sharing in public accounting. Time sharing makes available to the user the power of large-scale computer systems--their speed, accuracy, etc.--but eliminates some of the major disadvantages of acquiring such a system, including its large fixed cost, its frequent nonavailability due to tight batch processing schedules, and the necessity of having a large staff of highly-trained personnel to manage and operate the system. The type of problem that is best suited to the application of time sharing is one that occurs relatively frequently, but at irregular intervals, and is therefore not amenable to advance scheduling. The need for computer time for problems of this sort is what makes the immediate access feature of time sharing so valuable. A second feature of a good time-sharing application is that the problem has standard solution technique with relatively few variations. Writing program for such a problem will not be as difficult as for a more complex problem. Probably the most potentially useful applications of time sharing in the audit area involve statistical sampling, both in drawing a sample and in appraising the results of a test. Programs which generate sets of random numbers are very simple to write, and are also usually available among the library programs supplied by the time-sharing service.

Deals with issues related to the accounting practice in the United States. Simplified worksheet for source and application of funds; Comparison between direct and absorption costing; Extent of adherence of practicing accountants to the Statement on Auditing Procedure No. 39.

This article discusses the application of statistical sampling to small business audits in the U.S. Published studies on the application of statistical sampling have, in general, been related to large company audits. Even those supposedly applicable to audits of small businesses deal with companies having a minimum of approximately $1 million in accounts receivable and about $5 million in sales. The determination of the field of items to be examined is the focal point of statistical sampling. The auditor must know the system well enough to know that each type transaction will be processed in the same manner and have an equal opportunity to be examined. One of the most important audit judgments made in using statistical sampling is that of deciding what confidence level and degree of precision should be used. Each test and each accounting system require an evaluation of internal control and a determination of the significance of the test on the financial statements.

The article presents a corporation tax return review sheet. Law practitioner Jackson L. Boughner has prepared the review sheet. The sheet addresses the complexities of corporation tax returns. The increasing complexities of corporation tax returns are making it more and more difficult for the small practitioner to he sure each return is complete and nothing is overlooked. An oversight might be serious and costly, or it might just be embarrassing.

Examines areas of concern in the practice of accounting. Relation between the weighted totals for determination of professional fees and retirement of partners; Method of increasing fees in line with rising salaries and wages; Situations where a client might recommend a practitioner.

Discusses cooperative efforts of accountants and lawyers in trials. Experience of the author related to a trial in which he was asked to be an expert witness; Preparation for an actual presentation of accounting information in the courtroom; Areas of joint contribution of accountants and lawyers.

The article discusses the commendable spirit of continual practice by certified public accountants (CPA) by citing a motivating example. It depicts how after the serious accident of an fellow accountant, CPAs of the Idaho Society of Certified Public Accountants took over the pending works of injured colleague. The Society notified the officers of the state society, who approved the action taken and immediately called the Society's emergency professional assistance committee to active duty. Subsequently after the death of the injured colleague, all the clients were requested on the letterhead of deceased CPA to cooperate in the grave situation. List of the clients was prepared and all the CPAs of the society were given the choice to serve the clients of deceased colleague. Each CPA or representative at the meeting was told to review the list and make a separate written offer for each client they would like to serve. The efforts of the Idaho Society of Certified Public Accountants reminds of the proverb "The show must go on."

This article focuses on self-management, a vital subject encompassing the professional development program for accounting practitioners and small firms. Self-discipline includes a schedule to determine priorities and to allocate time and complete all assignments and still allow for social life. An important facet of self-management for the accountant is being well prepared when he goes to a client's office. On an out-of-town engagement, it is even more essential that nothing be forgotten. It is embarrassing to have to call the office for something that should be in the possession of the accountant. Self-confidence is also an aspect of becoming an effective manager. If a major decision has to be made, it is the accountant's responsibility to gather all pertinent facts and express a preliminary opinion based upon his observations.

The article provides information about the Keogh plan for retirement. The two key tax advantages of the Keogh plan are that contributions are tax deductible and that after the contribution is in the plan, it begins to earn on a tax-free basis. Keogh plans are available from four different sources: from commercial and savings banks, insurance companies, mutual funds and the federal government which offers special government bonds that you can use to set up a plan.

This article addresses the problems of reducing partner turnover and improving partner performance in an accounting firm. The advantages of a permanent partnership are the following: the building of a strong organization and clientele; presentation of an image of stability to the public and financial community; providing for succession and financial security for partners and staff; and maximizing efficiency and profitability in serving clients. To keep the partnership permanent, a firm should recruit the best personnel available and give them the best training. It is important to keep good communications among partners and others in the firm. To keep a partnership permanent, it is necessary to follow the unpleasant rule of weeding out the partners who do not perform. It is generally desirable to select partners from the staff rather than bring in outsiders. It is important to know as much as possible about a potential partner in advance. Also, bringing in an outsider may affect the morale of the present staff. It may be necessary at times to go outside when the firm needs a specialist not available on the staff, but even greater care should be followed in that selection process.

This article addresses the importance of controls in the successful management of an accounting firm in the U.S. Proper controls are an important cornerstone in the management of any organization. Accountants understand and appreciate the need for controls and recommend them to clients. Certainly larger and medium-sized firms have learned to apply various procedures in controlling their organizations otherwise they would not have grown to their present size. On the other hand, many firms could probably improve their present systems of controls. They may have too many controls or too few or the wrong ones. For a system of controls to work effectively, the firm must have designated management authority. This is usually a managing partner but occasionally is structured in some other form such as an executive committee. The type of management that functions best in an environment of partners and professional staff is one that provides leadership without being authoritarian. Effective management and effective controls go hand in hand. Controls would not work without management authority. At the same time, good management will insist on effective controls and cannot do its job without them. The partners are key people and the firm's success hinges on their performance.

The article focuses on the need of management by objectives for public accounting firms of the seventies in the U.S. Management by objectives must start at the top of the organization so that the purposes of the business must flow downward. The preparation of strategic options requires that they be considered as general involving all of the major managing partners and unit heads, and staff persons. Popularly applied is the system of management which manages operations by objectives, a system governing annual goal setting.