SEC commissioner views accounting principles;Survey of university accounting;

              SEC COMMISSIONER
VIEWS ACCOUNTING PRINCIPLES
Byron D. Woodside, one of the five
members of the Securities and Ex­change
Commission, gave his views on
how accounting principles can best be
established when he addressed a meet­ing
of the National Association of Ac­countants
on June 23 in Washington,
D.C. We consider his statement an ex­cellent
analysis of the situation.
"Speaking for myself," said Mr.
Woodside, "it is better, I think, to have
some of the looseness—the creaking
joint, if you will—some sacrifice of the
ultimate in consistency and uniformity
and acceptability under such a system
than to seek the rule—government or
industry inspired—which either binds
people to a rigid conformity or sets up a
standard from which departures multi­ply
in achieving solutions to problems."
"We thought the dismay with which
our reaction to the investment credit
episode seems to have been greeted, in
some quarters, most unfortunate," con­tinued
Mr. Woodside. "We intended
no rebuff to the profession or the Ac-
If you look behind the expense of a
college education to what it costs to
run a modern college with its wide-ranging
activities, you get a glimpse
of an intricate accounting problem.
Solving it is the chief business of the
1,400 people who belong to The Na­tional
Association of College and Uni­versity
Business Officers.
In 1963, the National Association
sent a questionnaire on accounting
practices to a sample of colleges, and
H&S analyzed the replies. Responses
to the 44 questions were received from
145 institutions, and tabulations based
on more than 6,000 answers were pre­pared
by Woolsey Carmalt, of the Ex­ecutive
Office Research Department.
William J. Couch, Chicago Office prin­cipal,
then drafted an analysis of the
counting Principles Board. On the con­trary,
we have encouraged and continue
to encourage them in their work. We
would caution, however, against the
profession undertaking to do what you
have always pleaded that we not do.
"We know from long experience that
even a relatively simple matter such as
our Rule i4a-3, which in effect says a
company's financial statements in its
annual report to its stockholders should
not be inconsistent in any material way
with the financial statements filed with
us, becomes an extremely difficult and
protracted exercise in rule-making and
in fact somewhat contentious. The task
you set yourselves to force conformity
on matters of accounting principle when
there is not in fact acceptability of con­formity,
I think, is an impossible one.
In any event, such a step calls for full
exploration of problems and proce­dures.
But this view in no sense reflects
upon the efforts of those dedicated,
highly intelligent and articulate public-minded
members of the profession who
data, which was edited and reviewed
in Chicago by Delford W. Edens and
Ralph S. Johns.
The survey was published in July
with the rather formidable title, Anno­tated
Tabulations of College and Uni­versity
Accounting Practices. It is ex­pected
to be useful to college business
officers in assessing the practices of
their own institutions and to a national
committee which is revising the* 12-
year-old manual, College and Univer­sity
Business Administration. Mr. Johns
is a member of the committee and
served on the predecessor committee
that planned the earlier manual.
Accounting for colleges follows gen­erally
accepted accounting principles,
but because the circumstances in
which colleges operate are different
vigorously urge more, and more pen­etrating,
research and who constantly
seek to narrow differences and, where
possible, broaden the scope of that
which is truly 'the acceptable' of the
profession. We salute them and their
efforts.
"Those who wish to compel conform­ity—
or rather seek to have us compel
conformity—for only we in the final
analysis have the tools to enforce the
law or to set enforcement in motion-will
no doubt be less than happy with
this approach. What then are we left
with, say they, except education and
persuasion?
"The short answer in our field of activ­ity,
I think, is that these have been the
principle tools by which so much has
been and continues to be accomplished.
They have been the genius of the ad­ministration
of the disclosure provisions
of the '33 and '34 Acts. With your con­tinued
assistance, I think they are likely,
in major respects, to remain so."
from those of other organizations, the
principles are applied in different ways.
For example, it is generally not con­sidered
necessary to provide for depre­ciation
of educational plant (classroom
buildings, etc.). One reason for this is
that these facilities have usually been
acquired by gift and it is expected that
replacements will have to come the
same way. On the other hand property
of auxiliary enterprises such as stadiums
is often depreciated. College business
officers have pondered long on these
aspects of depreciation and some diver­sity
in their thinking shows up in the
tabulations.
Our Firm was pleased to be able
to work with the National Association
on this project in a field in which we
have long been especially interested.
A SURVEY OF
UNIVERSITY ACCOUNTING
7