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34 HASKINS & SELLS May Certifying and Not SURPRISE is sometimes expressed that accountants give their approval and certify to published statements, the form of which is at variance with the generally accepted ideas on that subject. Critics have gone so far at times as to accuse accountants of lending their names to statements which literally were not true. Probably every practicing certified public accountant has had the experience of attaching his name to a statement that he would have changed materially in form could he have given expression to his own ideas in an untrammeled manner. A published financial statement of a given corporation is a statement prepared and issued by the corporation in question. Hence, it should not be considered strange if the financial or other officials of the corporation seek, in preparing the statement, to express in their own way the financial affairs of the corporation. The accountant may approve it or not, as he sees fit. Often the advice, suggestions, and guidance of the accountants are sought in the preparation of published statements. Sometimes such aid is neither sought nor accepted when offered, and what amounts to an ultimatum is necessary to further progress in the issuance of a statement with certificate attached. The policy of accountants generally, however, is to accede to the wishes of clients in matters of statement form as long as the statement is not so constructed as to be misleading. Whether a reserve for depreciation is deducted from an asset account or shown broad is a matter of small concern if there is a reserve and it is made to appear with proper description on the balance sheet. Accountants individually may have their own notions on the subject of locating depreciation reserves and other equally moot questions. Readers of statements may have certain personal preferences, and even deep convictions. Yet no one who reads a balance sheet with the reserves treated either way is justified in claiming to have been misled about them if they are adequately described. There is no necessity for going to war, so to speak, with a client who has ideas of his own and wishes to express them in his published statements if that procedure does not obscure the facts or offer opportunity for anyone to be misled. There is no reason for refusing to certify because the form of statement may differ somewhat from the accountant's concept of the ideal. A statement is correct if it discloses the facts. The order and manner in which the facts are arranged are likely to have a very decided bearing on the ease with which the statement may be read and understood. If some one, in whose hands the power rests, chooses to set forth the facts in a statement so that they are not as easily understood as they might have been had they been arranged differently, the good faith of the accountant need not be questioned because he certifies to the statement. When an accountant permits an item of importance to be classified as a current asset, when there is no chance of its realization within a reasonably short time, he is open to criticism on the ground of lending his approval to a misleading statement. When an accountant winks at sleight of hand manipulation at the close of a fiscal period in order that readers of the statements may be deceived by a condition which changes with the dawn of the day following, he is not faithful to the trust which his title implies. There are some cases, however, which may be called border line cases. These are cases where certain items do not follow strict theory in their presentation in statements. For example, the recovery of taxes paid in prior years finds no good accounting theory which will permit the deduction thereof from tax expense of the current year. Yet no one will be deceived
Object Description
Title |
Certifying and not |
Author |
Anonymous |
Subject |
Financial statements |
Citation |
Haskins & Sells Bulletin, Vol. 08, no. 05 (1925 May), p. 34-35 |
Date-Issued | 1925 |
Source | Originally published by: Haskins & Sells |
Type | Text |
Collection | Deloitte Digital Collection |
Digital Publisher | University of Mississippi Libraries. Accounting Collection |
Date-Digitally Created | 2009 |
Identifier | HS Bulletin 8-p34 |