Accounting data as a basis for administrative judgment;

              94 HASKINS & SELLS October
Accounting Data as a Basis for Administrative Judgment
HOW often has a client been known to
say, "This is a very fine looking
report but it doesn't tell me what I want
to know"? How often has a public ac­countant's
report been condemned and
thrown aside because, while superb in ap­pearance
and perfect in form, the content
was well-nigh meaningless?
The public accountant realizes, presum­ably,
that he is a renderer of service; a
purveyor of information; and that the in­formation
will be used by some one who
has not the time, inclination, or technical
knowledge to prepare it.
The president of a large corporation may
once have been a professional accountant.
He may be familiar with all the technique
of accounting. But he may have so many
other things of importance to do that he is
not able to take the time required to pre­pare
a mass of accounting data needed in
the determination of some financial or
operating policy.
The trustee under some important trust
agreement may know what to do or not
to do once he has certain information, but
he may be lacking in the technical knowl­edge
necessary to the acquisition of the
information.
So it is that the public accountant needs
to spend more time in thinking about the
purpose for which his forthcoming report
is to be used before he begins his field work.
He may properly inquire of the client the
use to which the information is to be put
if he is unable to so determine. The Amer­ican
accountant is applauded for his abil­ity
to recognize and treat of the big things
in an accounting situation while he passes
over the insignificant details. He may
well give more attention to putting himself
in the place of the client, or of the user of
the information which he incorporates in
his report.
"Facts not opinions" is said to have been
the slogan of a famous engineer. "Causes
as well as results" might be a fitting slogan
for accountants. The changing times of
the past few years have made necessary
many changes in procedure. Compara­tive
figures which once told a significant
story may now, owing to changes in basic
factors, be entirely meaningless, if not
misleading.
It is true that any attempt to go behind
the cold figures and interpret them may
lead the accountant into the field of sta­tistics.
Whether statistics as a subject is
a branch of accounting or accounting is a
part of statistics has not been settled.
Just when it will be nobody knows. So
far as the business man is concerned he
doesn't care. Facts are what interest him.
If it is necessary for the accountant to fol­low
up the information drawn from the
financial books with statistical data, the
units or other factors for which are taken
from subsidiary memorandum books, or
even evolved by the accountant, he will
meet with little objection from the client
if they have real value.
From a practical point of view care must
be observed to make statistics of value.
There is such a thing as overdoing statis­tical
compilation and presentation in a
report. It takes time to gather and set
it up in the rough. It costs considerable
to type it. Unless, after it is incorporated
in a report, the client is able to use it, there
is likely to be dissatisfaction at the ex­pense
involved. Few accountants, it is
believed, err on this side. In most cases
of criticism the fault lies in the utter fail­ure
to explain or interpret the figures.
An increase or decrease in the cost of
production for a given period may be of
interest as explaining a fluctuation in the
profits, but it affords little assistance in
the matter of management or future pro­duction.
Detail figures as to materials and