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by JAMES F. PITT and E. PALMER TANG Presidential Campaign 1968 is over and the votes tallied. Fading into history are the primaries, platforms, promises and platitudes. We wonder, however, how many noticed the conspicuous absence of the CPA's opinion on personal financial statements published in connection with this campaign. Having been personally involved with the statements of one candidate in 1964 who ran for top honors in 1968, we waited anxiously to see how the profession would resolve the controversies generated in 1964 among professional and academic people. But in contrast to 1964, when it was the vogue to issue audited personal financial statements, the CPA's opinion did not accompany the candidates' financial statements published in 1968. What happened? Was the audited personal statement a fleeting fancy, or has the accounting profession been so unrealistic in its pronouncements in this area that the disclaimer of opinion, now required in virtually every case, offers little appeal to the potential buyer of our services? Accounting Research Bulletins issued by the American Institute of CPAs have been specifically directed to "accounting practices reflected in financial statements and representations of commercial and industrial companies" and not to "accounting problems or procedures of religious, charitable, scientific, educational, and similar nonprofit institutions, municipalities, professional firms, and the like."1 Until 1968 virtually no printers' ink had been consumed in defining the standards for personal financial statements. Banks have long required personal balance 1 Accounting Research Bulletin No. 43, American Institute of Certified Public Accountants, 1953, page 8. sheets from their personal borrowers and from guarantors, but, since audited statements were hardly ever required, the certified public accountant has exerted little or no influence over their form and content or the method of reporting. In most instances, the forms provided by banks to personal borrowers for reporting upon their financial position have provided specifically for reporting assets at fair market value, without regard to historical cost. While this method of reporting assets has long been considered unacceptable for commercial and industrial enterprises, it has been used almost exclusively by investment companies and stock brokers. Much like an individual, these companies emphasize financial condition in their reports rather than the matching of revenues and expenses. Market values, therefore, provide the most timely criteria of that condition. Market values also provide comparability for measurement of total investment performance by including the effect of realized gains (dividends on income stocks) and unrealized gains (appreciation on growth stocks). The financial statements published by the 1964 candidates were not models of consistency— which is quite natural considering the previous lack of attention to this subject. Perhaps the greatest divergency existed between the statements of President Johnson, which were basically at cost, and those of Vice President Humphrey, which were basically at market. At any rate these divergencies, particularly the basis of reporting, caused the greatest furor within professional and academic circles. Important differences in the form and content of these two reports and financial statements are shown here. 4
Object Description
Title | Audited personal financial statements: Did somebody goof? |
Author |
Pitt, James F. Tang, E. Palmer |
Subject |
Finance, Personal -- United States -- Accounting Financial statements -- Auditing |
Personal Name |
Humphrey, Hubert H. (Hubert Horatio), 1911-1978 Johnson, Lyndon B. (Lyndon Baines), 1908-1973 |
Citation |
Tempo, Vol. 14, no. 4 (1968, December), p. 04-07 |
Date-Issued | 1968 |
Source | Originally published by: Touche, Ross, Bailey & Smart |
Rights | Copyright and permission to republish held by: Deloitte |
Type | Text |
Format | PDF page image with corrected OCR scanned at 400 dpi |
Collection | Deloitte Digital Collection |
Digital Publisher | University of Mississippi Library. Accounting Collection |
Date-Digitally Created | 2010 |
Language | eng |
Identifier | Tempo_1968_December-p4-7 |