The Accounting Historians Journal
Vol. 13, No. 2
Robert Chatov STATE UNIVERSITY OF NEW YORK AT BUFFALO
WILLIAM O. DOUGLAS ON THE TRANSFER OF THE SECURITIES AND EXCHANGE COMMISSION'S AUTHORITY FOR THE DEVELOPMENT OF RULES FOR FINANCIAL REPORTING
Abstract: As an SEC Commissioner, William O. Douglas favored active SEC par-ticipation in the development of rules of accounting for financial reporting under the Securities Acts. A retrospective letter dated September 29, 1973 indicates that the pre-War SEC Commission did not contemplate the virtually complete transfer to the private sector of the authority for development of corporate financial re-porting that characterizes the position of today's SEC.
The present initiative for corporate financial reporting rules is in the hands of the private sector, and there are serious doubts in the minds of some contemporary Congressmen about the wisdom of that arrangement. As of this writing, a year-long series of hear-ings was being conducted by a major House subcommittee into Securities and Exchange Commission oversight of the accounting profession. The hearings covered arrangements for the develop-ment of rules for corporate financial reporting and auditing stan-dards. The manner in which those rules became institutionalized in the private sector has been spelled out elsewhere [Chatov, 1975] and need not be covered in this paper. What is at issue at the present time is the question of the vesting in private groups of functions originally specified as governmental responsibilities. Regardless of the desirability of having a self-regulating, profit-oriented professional group control the rules under which they carry out their business operations, over a period of some fifty years the control of those functions has become increasingly in-stitutionalized in private hands. This clearly makes for a form of