Great unaudited;

              H A S K I N S & S E L LS CNEHWIC AYGOORK KANSAS CITY
PHILADELPHIA CERTIFIED PUBLIC ACCOUNTANTS SEATTLE
PORTLAND
DETROIT DENVER
CLEVELAND ATLANTA
SAINT LOUIS BULLETIN DALLAS
BOSTON SALT LAKE CITY
BALTIMORE TULSA
PITTSBURGH WATERTOWN
LOS ANGELES SAN FRANCISCO LONDON
BUFFALO CINCINNATI PARIS
NEW ORLEANS EXECUTIVE OFFICES
HASKINS & SELLS BUILDING
37 WEST 39TH ST.. NEW YORK
HAVANA
SHANGHAI
VOL. IV NEW YORK, FEBRUARY 15, 1921 No. 2
The Great Unaudited
THE impression doubtless prevails that
most business concerns avail them­selves
of the services of public accountants
and have their accounts audited periodic­ally.
Banks are increasingly insistent in
their demands for certified financial state­ments.
Advertisements announcing flota­tions
of securities more frequently than in
the past carry with them the names of
well-known firms of public accountants.
There are many current signs which contrib­ute
to the impression.
But unfortunately the impression ap­pears
to be erroneous. If one may judge
from a study of Moody's Manual of Rail­roads
and Corporation Securities, Indus­trial
Section, 1920, it is far from true.
In this publication are listed the names of
3,711 concerns. Those which are shown as
being audited by public accountants num­ber
590. The other 3,121, or 84 per cent.,
are unaudited.
It is a fact that some which are audited
are not so shown. But granting that the
number now indicated as being audited
might be increased by 33 1/3 per cent.,
which is true in one case, the number still
unaudited would be 2,924, or 78.79 per
cent. of the total listed.
This of course is almost unbelievable to
any one familiar with the growth and de­velopment
of accountancy in the United
States. Theoretically, the period during
which the professional accountant has
functioned in this country covers about
forty years. Practically, twenty-five years
would perhaps be more exact.
Accountancy is reported to have flour­ished
in Italy as early as 1742. It
apparently did not gain much headway in
Great Britain before 1850. In no country
or time, probably, has professional account­ing
practice achieved the magnitude and im­portance
and withal the rapidity of growth
that have marked its progress in the United
States. And behold what the statistics show.
The accountant of the past was a checker
of figures. His concern was largely with
their accuracy. He had chiefly to do with
the auditing of figures which involved cash
and fiduciary integrity. His imagination
or knowledge seldom carried him beyond
the elementary stages.
The accountant of to-day sees his task
as a much larger one. The scope of his
work is much broader and more compre­hensive.
Modern business has assumed
not only large proportionsn but extreme com­plexity.
Accounting has come to be
regarded as an instrument of business
control. The executive depends upon his
financial statements for information and
guidance. Costs as a basis for manu­facturing
and trading are regarded as