The Development of Accounting Principles
by JOHN W. QUEENAN Partner, Executive Office
Presented before the Financial Executives
Institute, Detroit—September 1968
THE ACCOUNTING PRINCIPLES BOARD presently finds itself in a position colloquially described as "damned if you do and damned if you don't." I don't know how closely you've been following newspaper and magazine articles dealing with the Board's activities, but it's been interesting to me to see how many times the Board has been put in a "can't win" kind of situation. For example, in a recent article, one critic accused the Board of being biased in favor of the "public accounting" approach to accounting principles, and not enough directed, or oriented, to the practical, businessman's
side of accounting principles. In support of his contention he contrasted
the large number of practicing public accountants on the Board, including the more or less automatic representation of the so-called "Big Eight" accounting firms, with the minimal representation given to business.
(The Board, by the way, presently has 19 members, of whom 15 are practicing CPAs, including representatives from the Big Eight firms; two are from the accounting departments of large universities; and two are from industry.)
Meanwhile, other critics look at the representation of the large firms on the Board in quite a different light. These critics note that the Big Eight accounting firms are the auditors for all but four of the 100 largest industrial corporations in the United States and for all but about three dozen of the 500 largest industrial corporations. Then, giving us little credit for our reputation for independence and ethical behavior, these critics point out what they consider to be the inevitability of the collective influence of all these large corporate clients on the direction that proposed Opinions of the Board will take.
So, according to some, the Board has too little industry representation,
while, according to others, industry has an indirect but pervasive influence on Board decisions.
UNIFORMITY—TOO MUCH OR TOO LITTLE?
Another of these "can't win" situations relates to the matter of uniformity
of accounting principles. On the one hand, some critics assail