Comparative statements;

              Accounting Research BULLETINS
No. 6
•
Comparative Statements
Issued by the Committee on Accounting Procedure, American Institute of Accountants, 270 Madison Avenue, New York 16, N. Y.
Copyright 1940 by American Institute of Accountants
EXTENSION OF USE RECOMMENDED
THE increasing use of comparative statements in the annual re-
ports of companies is a step in the right direction. The practice enhances the significance of the reports, and brings out more clearly the nature and trends of current changes affecting the enterprise. The use of statements in comparative form serves to increase the read-er's grasp of the fact that the statements for a series of periods are far more significant than those for a single period—that the statements for one year are but one instalment of what is essentially a continuous history.
It is therefore recommended that the use of comparative state-ments be extended. In any one year it is ordinarily desirable that the balance sheet, the income statement and the surplus statement (the two latter being separate or combined) be given for the preceding as well as for the current year. Footnotes, explanations and account-ants' qualifications already made on the statements for the preceding year should be given, or at least referred to, in the comparative statements. If, because of reclassifications or for other reasons, changes have occurred in the basis for presenting corresponding items for the two periods, information should be furnished which will explain the change. This is in conformity with the well recognized rule that any change in practice which would affect comparability should be disclosed.
The question of responsibility to be assumed by the accountant in his report requires consideration. In general it is desirable that he should accept the responsibility of satisfying himself that the figures for the preceding year fairly present the position and results, and are properly comparable with those of the current year, or that any ex-ceptions to their comparability are clearly brought out. In the com-mon case in which the accountant will have examined the accounts of both years no difficulty in assuming this responsibility should arise.
Circumstances vary so greatly that it is not practicable to deal here
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April 1940