Wartime government regulations;

              Statement on Auditing Procedure
July, 1944
No. 21
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Issued by the Committee on Auditing Procedure, American Institute of Accountants, 13 East 41st St., New York 17, N. Y.
Wartime Government Regulations
Copyright 1944 by American Institute of Accountants
DURING the past decade there has been a significant increase in gov-ernmental control over business. Such control, particularly by the federal government, has been greatly extended under war-time conditions, as is evidenced by the laws and regulations relative to priorities, allocations, prices, wages and salaries, etc. As a result, business is subject to many procedural and reporting requirements which are implemented by penalties of varying severity for failure to comply. In the light of these conditions, important questions have arisen as to: (a) whether the responsibility of the independent ac-countant under the circumstances is such as to require an extension in the scope of the usual examination of financial statements to ascer-tain whether the client has complied with such wartime regulations; and (b) what steps the independent accountant should take when he has reason to believe that violation has occurred. In this statement the committee on auditing procedure deals with these questions.
The laws and regulations under consideration are those prescribed by the federal government to meet wartime conditions. The more important of these controls, the general nature of their requirements, and the penalties involved are set forth briefly as follows:
(1) The priorities and allocations system is designed to control the acquisition, fabrication, holding, and disposition of raw materials and products. Except at the retail level (where it is generally admin-istered by the Office of Price Administration), this system is adminis-tered by the War Production Board, which has issued a great number of general and specific orders and regulations, applicable to various industries and products, prescribing procedures and requiring re-ports of many kinds. Failure to comply may involve civil or crim-inal penalties, including suspension of operations, denial of prior-ities assistance, fine and/or imprisonment.
REGULATIONS UNDER CONSIDERATION
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