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3. American Institute of CPAs, Report of Special Committee on Opin-ions of the Accounting Principles Board, Spring 1965, "What are financial statements trying to present? Are they primarily an account of management stewardship, or primarily for investor guidance?" (pp. 12, 13) 4. Herman W. Bevis, Corporate Financial Reporting in a Competitive Economy (New York: The Macmillan Company, 1965). "Whenever a continuing mission of importance requires the assignment of responsibility and delegation of authority among people, the relationship usually also involves a periodic accounting of the uses of these responsi-bilities and powers. Society has, in general, assigned to corporate directors and management the responsibility of employing resources gainfully; after delegating commensurate discretionary authority over the utilization of capi-tal, society expects, and receives, the accounting to which it is entitled, (p. 7) "Taken literally, what are corporate financial reports—the end products of today's concept of corporate accountability? They are communications from specific people to specific people. Originating these communications are identifiable members of the management and the board of directors. Receiving them are equally identifiable people—those on the stockholder list at the cutoff date for mailing the report. The fact that these reports sooner or later may be received by thousands of other persons should not obscure the fact that they are essentially communications rendering accountings to present stockholders from the stewards of their resources. Moreover, the fact that prospective investors may use the information contained in the report to assist them in making projections in connection with investment decisions does not belie the report's essential nature and purpose as an historical accounting of what has taken place, (pp. 8, 9) "The foregoing assessment of the place of the financial report in the corporation-stockholder relationship suggests that it is a semiprivate com-munication or, at least, that interest in it is narrowly confined to those who are, or who would be, investors. But this is not so. Concern about the welfare and progress of our large corporate enterprises clearly transcends that portion of the society made up of stockholders. Interest in corporate financial reports involves much more than mere curiosity on the part of outsiders. Whether the corporation makes profits or suffers losses, especially over a period of years, is an indicator of the potential security or stability of employees, sometimes of entire communities, of creditors, competitors, sup-pliers, customers, and governmental revenues from taxation. Take all corpo-rations together and the interest and concern of society are widespread and obvious. It is this fact that suggests that the responsibility-authority-account-ability chain of the corporation and its management be examined more closely, (p. 9) ".. . corporations ... are required to, and do, render accountings which, although addressed to stockholders, also serve the purpose of society at large, (p. 12) 135
Objectives of financial statements: Selected papers
American Institute of Certified Public Accountants. Study Group on the Objectives of Financial Statements
Cramer, Joe J.
Sorter, George H.
Cyert, Richard M.
Edwards, James Don
Gellein, Oscar S.
Parker, C. Reed
Reinhart, Andrew J.
Trueblood, Robert M.
Wagner, Howard O.
Weston, Frank T.
Financial statements -- Standards -- United States
|Source||Originally published by: American Institute of Accountants|
|Rights||Copyright held by and permission to reprint: American Institute of Certified Public Accountants|
|Format||PDF page image with corrected OCR scanned at 400 dpi|
|Collection||Deloitte Digital Collection|
|Digital Publisher||University of Mississippi Library. Accounting Collection|