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The Columbia University Libraries reserve the right to refuse to accept a copying order if, in its judgement, fulfillment of the order would involve violation of the copyright law. Author: Bennett, Robert Joseph Title: Educational training of an accountant Place: Philadelphia Date: [1912] COLUMBIA UNIVERSITY LIBRARIES PRESERVATION BIBLIOGRAPHIC MICROFORM TARGET MASTER NEGATIVE # ORIGINAL MATERIAL AS FILMED - EXISTING BIBLIOGRAPHIC RECORD [01 Eb43 MONreOMEMV Bennett, Robert Joseph, 1871- Educational training of an accountant, by R, J. Bennett... Delivered before the Pennsylvania institute of cortified public accountants, Phila- delphia, January 15, 1912... Philadelphia, Bennett accountancy institute, j-1912j, 14 p. 22-^- cm. Ileprinted from the Journal of accountancy. 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"/M^ '^ '^ '^ fo f^ m O O -o m "o > C cd X T ^ ?; O 00 m o m i'V, ''* ' V ^ "/M^ 4^ 4^ ^ 1— • rv3 CXI = 3 3 AB( abcde ABCDE cdefghi FGH jklm 3 I IJKLM nopqr az (/> 7 OPQRSI uvwxyzl OPQR uvwxy Kc M c/> 5^ o»x OJ^ ■>J-< 00 fM 8 < 4 <^ J) II I ' I Educational Training of an Accountant* By R. J. Bennett Accountancy has grown to the dignity of a profession, and the accountant is its exponent. This being true, then the success or failure of the profession rests in the hands of its mentors, the accountants of the present generation; and whatever develop- ment it may make in the future must depend upon the attitude of the accountants themselves toward the institutions of learning into whose keeping is entrusted the educational training of the future practitioner. May I ask, Is all being done that could be done? Does each accountant of this State realize that he is charged with the responsibility not only of maintaining and ex- tending his own clientele, but of doing something toward the betterment of our profession? Is this Pennsylvania Institute extending its influence in the cause of accountancy education, and is it satisfied with conditions as they exist at the present time? There can be no central stage — we either progress or retrogress; and as soon as we allow ourselves to become apath- etic retrogression begins. Are the schools now giving courses of study doing their duty faithfully and efficiently, and if not what can be done for their improvement ? Indeed, it is not only a duty which we owe to the profession, but it should be our pleasure and privilege to do something, whether it be much or little, toward giving encouragement and providing efficient in- struction for the young men who aspire to be professional ac- countants. Does not every accountant in this State look with pride upon the lasting achievements and thoughtful, kindly con- sideration of your venerable dean of the accounting profession, the late Charles N. Vollum ! May we in turn, gentlemen, strive to emulate this leader who has passed to his reward, but who will live for years to come in the hearts and memory of the hundreds who have benefited by his generosity. While urging an unselfish service to the interests of profes- sional education, I do not for one moment lose sight of the fact that the Pennsylvania Institute of Certified Public Accountants has already done a lasting service to the profession in Pennsyl- vania, a service which is felt even to the extreme borders of the United States. I am sure that the welfare of rising accountants • Delivered before the Pennsylvania Institute of Certified Public Accountants. January is has been amply provided for by this Institute in estabhshing authoritative evetving cottrses of preparation under the direction of the University of Pennsylvania. This act redounds to your credit, and many young men have already had occasion to bless you for the exceptional facilities placed at their disposal. Nor must we forget the Pennsylvania State Board of Accountancy in vi^hose hands rest the first and final words of authority, a board composed of men who have been chosen because of their ability and professional standing to represent the State in guarding the interests of the profession according to the laws of Pennsylvania. The board's rules and requirements are clearly defined, its atti- tude toward candidates fully outlined and its recognition of edu- cational stanidards forcibly stated. The high standard set and maintained is a credit to their judgment, since it places their examination requirements on a plane with the State board of law exatniners and in keeping with true accounting requirements, rather than on the level of ordinary bookkeeping. If account- ancy is a profession then the only way to maintain its standards is by establishing requirements which mean something and which can be obtained only through a thorough course of preparatory training. The board's plan of outlining juSt what shall be re- quired on examinations and in suggesting the departments of law, finance, business, industry, accounting, etc., to be studied has opened the way for definite methods of preparation. We who are giving instruction are not left entirely to our own initi- ative in defining the courses of study, since they have been wisely provided for in the official outlines. The Need For Technical Instruction The accountant's work is enlarging day by day and the pos- sibilities of the future can hardly be conceived at this time. The profession of accountancy is indeed in its infancy, notwithstand- ing the wondrous strides that have been made within the past decade. In case every business concern on Market, Giestnut, and Arch Streets of this city were to realize the benefits that could accrue from engaging the services of public accountants, it is interesting to speculate as to how many principals and as- sistants would be needed for the work. This is likewise true of the other sections of the city that are of equal importance as business, financial and industrial centers. This method of spec- ulative reasoning might even be extended to other cities of importance throughout this great country of ours with the only logical answer that indeed but a beginning has been realized, and that the avenues for future development are guarded by the professional brethren themselves. Even a brief contemplation of this country's greatness must convince us of a more extended field of activity, whose plans of cost finding and account keeping must necessarily devolve upon the skilled accountants. The wonderful expansion of our country's foreign trade relations is a matter for rejoicing to business men, manufacturers, financiers, and accountants alike. Contemplate the boundless resources of this country, many of which are yet undeveloped, the extensive domestic and foreign commercial activities, the billions of in- vested capital, the endless chain of banking facilities, the varied manufacturing industries, the voluminous exchange of commod- ities of all kinds, the wonderful perfection of transportation fa- cilities, and the awakening interest in governmental and munici- pal problems. Does not all of this indicate most forcibly that the aid of skijled accountants and well-trained men will be required in in- creasing numbers, and that the future of this profession of ours has in store for us possibilities whose magnitude we have not yet comprehended ? And if this be true, it is our duty to make suitable provision for the training of this army pf accountants who are to have as clients the future captains of industry ; and if the business of the future itself is to be conducted on a more eflficient basis because of a better knowledge of scientific prin- ciples, then to keep on a par with such development the account- ant of the future must be equally efficient in his line of work. As an evidence of the progress which has already been made by accountants, I quote from President Sterrett's annual address before the American Association of Public Accountants, October i8, 1910: " A year ago the Association had a membership of 765, exchisive of honorary members, and excluding the duplication of membership arising through membership by certain individuals in more than one State society. Our membership on the same basis is now 869, or a growth during the year of 104 members, which is considerably in excess of that in any previous year m the history of the Association. " This increase of membership arises in part through applications from those to whom certificates have been issued during the year by the various State examining boards, but it is also partly the result of an earnest effort on the part of the State societies to increase their membership in their respective territories. I I i ** Even though our ranks included all holders of the C. P. A. certifi- cates, our numbers would still make it apparent that accountancy in this country is yet in the comparatively early stages of development. In England, with a population much less than that of the United States, we find the Institute of Chartered Accountants reporting a membership in April, 1910, of 4,130, while the Society of Accountants and Auditors has an enrollment of some twenty-three hundred. Even in the far-off island of New Zealand, the Society of Accountants in June, 1910, was able to boast of a membership of 2,146. It is true that a portion of the latter membership consists of men who are not in practice, but it is probable from the information in hand that the members in practice form as large a proportion of the total membership in the New Zealand Society as they do in our own. These comparisons are in no tone of discouragement ; quite the reverse." I might add that in Canada where the chartered accountant is held in high esteem, there are at least seven legally incor- porated provincial institutes of chartered accountants with power to hold examinations and grant degrees, with an active member- ship Hearing the 300 mark. The largest of these, the Institute of Chartered Accountants of Ontario, was incorporated in 1883 and at present has an active membership of about 140 members. Accountancy education in Toronto has been provided for by the Chartered Accountants' Students' Association organized under the auspices of the Ontario Institute. Two courses of lectures, junior and senior, are given by leading chartered accountants during the winter months. The topics covered are bookkeeping, auditing, arithmetic, business investigations, commercial and company law, municipal law and accounting systems, the bills of exchange act, etc. I believe that McGill University of Mon- treal and Toronto University also have interested themselves in the cause of higher commercial education, following the plans adopted by the various imiversities of this country. Commercial Education Though England leads the world in the number and pro fessional qualifications of chartered accountants, she is indeed remiss in providing higher commercial instruction. Advanced commercial education and accountancy, however, are now re- ceiving attention in several of the English schools and colleges. Yet the only institutions to whom much credit can be given are the London School of Economics and Political Science, and the University of Birmingham. Each of these maintains suitable courses of preparation for the accountancy examinations, yet in % 1 4 Y fli f i m. I ) every case apprenticeship is a prerequisite to the final examina- tion. For the recognition and development of technical com- mercial education we must look to Germany, for the " Made in Germany " trademark which means so much to the Fatherland is a result of technical knowledge, careful preparation, and high- ly-skilled workmen. The geographical position of England and the people's highly-developed instinct for trade, together with other influences aided her in becoming the first commercial na- tion of the world. In Germany, however, and two or three other nations of Europe, their lack of natural resources, the unfavor- able geographical position and adverse circumstances have awakened the people to the realization of the fact that it is only a superior educational training that will put the merchants and manufacturers in a i)osition to compete with those of England. Thus the superior technical training of the German commercial student has secured for him in all parts of the world desirable appointments and positions of responsibility. The progress of elementary, secondary and higher commer- cial education in the United States is well known and is being efficiently taught in many high schools of commerce and in several of our leading Y. M. C. A.*s. The highly developed courses of commerce, accounts and finance now being maintained in these schools and universities are due largely to the foresight and progressiveness of business men and public accountants, and to the cooperation of educational authorities. In giving credit, however, I am sure it would be unfair not to recognize fully the difficult, discouraging pioneer work done in the interests of com- mercial education by the business schools of this country. Some of them, indeed many of them, maintain very limited courses of study, but on the other hand there are many well-regulated merit- orious, high-grade commercial schools that are in every way worthy of commendation. They are entitled to credit for having developed the efficient courses of study now so popular in our commercial high schools. Ample recognition of the demands of commerce, accounting, finance and administration has been given to the establishment of regular courses of study in some of the leading universities, including Pennsylvania, Harvard, Wisconsin, Illinois, Dart- mouth, Pittsburgh and others. These being regular day courses, however, are designed to provide a broad business training for young persons desiring to enter commercial life, but they do not 7 all as yet attempt to prepare for the C. P. A. examinations. The men who desii^e to qiaalify as public accountants are of course occupied during the day, and consequently evening or afternoon instruction must be provided. This provision was first made by the Universities of New York and Permsylvania, followed later by several others. The courses should cover the entire field of business science in order to include as many broadening subjects as possible, in addition to preparing for private and public ac- countancy work, tiie C. P. A. examinations, etc. Yet in outlining these courseis^ great care must be exercised to see that the limit of endurance is not exceeded by the student who is usually burn^ ing the candle at both ends in order to obtain his education. Evening schoc^ are now estaMtshed in nearly every State where accountancy legislation has been enacted, and generally under the auspices of t!ie accountants who give more or less time them- selves to the advancement of the courses; but notwithstanding this assistance, it usually devolves upon school officials them- selves to develop the course and maintain its efficiency. There are mafty difficulties attendant upon the condtict of suitaWe courses of sttidy, especially in the accounting subjects, since es- tablished precedents and authoritative text-books are not always available. The other subjects do not present so much difficulty. Uttdef such conditions the cooperation and kindly advice of the practising^ accountants themselves is a necessity. If these courses are designed to prepare accountants for successful prac- tice or for examinations, they should by all means be supervised by the representative body of accountants, either by advisory committees or through required reports. It is a well-known fact that the evening school, no matter how ably conducted, cannot equal actual practice in all respects, nor can those who develop the courses and give instruction keep in touch with actual ac- counting procedure at first hand to the same extent as those who are in constant practice. I am convinced, however, that an authoritative evening course of study is of great value to the yo«mg accountant, both in preparing for C. P. A. examination and in Ms professional practice. The theory and practice of accounting will no dbubt soon be presented m authoritative text- book form, thereby providing trustworthy instruction literature; but until that time comes each school must develop its own courses to a large extent. Those successful accountants who are experienced from actual contact are usually too busily engaged 8 I I I I in big things to devote much time to suitable preparation for con- tinuous class service, consequently an occasional lecture is all that can be expected from them. On the other hand very few of the most skilled practising accountants are qualified to conduct class work, and even if they were, the average scliool could not afford to pay the price demanded for such services ; therefore the school considers itsdf fortunate when it can secure the services of a qualified accountant who can teach well and im- part what he knows to others, even if he has not liad the prac- tical experience of the ablest accountants. In regard to the schools themselves, why is this school or that not up to the standard required by accountants? Is it because of some difficulty that I have mentioned, or is it due to a lack of cooperation from accountants? We often hear that such a school teaches only theory and is not up to the standard while some other institution is praised because it teaches according to well-defined rules of practice? Is this criticism always just? An investigation might cause praise instead of censure. It should be remembered that practice is simply applied theory. In my own experience of outiining and conducting courses I know the difficulties that usually loom up and how tremendously im- portant is the cooperation of men who are competent to advise. No matter what school is endeavoring to provide accountancy instruction it cannot successfully do so without your aid and support. And the men who specialize as teachers of account- ancy, though there are few as yet, cannot be expected to con>- pete on equal footing with the leaders of the profession in active practice any more than the professor of law and materia medica, as only a part of their time can be given to outside interests. Yet the instructors are doing a lasting service to the profession, and if they are really progressive and thorough students themselves they can become proficient accountants and are therefore entitl"ed to the helpful consideration of those who are daily in the heat of the battle. AcCOU-NiTANCY NOMENCLATURE The drawbacks in providing more highly efficient courses in- advanced accountancy are due to many causes, among which are lack of established precedents, a lack of reliable technical literature, a lack of efficient qualified instructors, the desire of students to pursue only short courses, and the absence of uni- formity in principles and procedure. The need of an established nomenclature is apparent to both accountants and instructors, and the student who is usually quick to observe becomes con- fused because of the different terms and varying methods now in use. There is certainly no harm to be done in individual cases where the terms used are clearly understood by the client, but the majority should be considered by giving heed to the necessity for a uniform terminology. When the doctors dis- agree what are the teachers to do? But if we accountants will decide upon a uniform use of terms and a definite understanding among ourselves those who understand will have established precedents to follow. Just what should be included in the cur- riculum of the evening course is hard to decide, and like all other institutions changes must be brought about to meet the demands of the times and the needs of students. Certain subjects should be compulsory and others elective in order to conform with the antecedents of the student, his educational acquirements, daily occupation and his hours of service. Some schools require all subjects to be covered during a three-year course, while others take four years for the same work, the time in each case varying from three to five evenings per week. By permitting the student to elect for himself, with the advice of the dean of the school the number of years he shall devote to the course, I feel that in the end better results can be obtained than by making rigid requirements to be followed by all. The entrance requirements to the evening course are of considerable importance and should consist of a high school edu- cation and a knowledge of bookkeeping as now wisely required by our state board, but as to what constitutes an equivalent is a matter that is very hard to determine and which to my knowl- edge has not been defined by the board. This is a question that causes more speculation than any other point with which we have to deal largely because it is not so clearly defined as the other matters in the board's requirements. Students may have been admitted to courses under certain standards of admission, yet their remains the doubt as to whether or not these standards will be accepted by the examiners as an " equivalent." Who shall say that because a young man has not had the benefit of a high school course, he is not fit to become a public accountant? If we were to select one hundred of America's ablest public ac- countants I fancy that many of them would state that they had 10 I . 1 not attended high school. These men, however, have educated themselves by study, thought, research and a definite line of selected reading. By providing continuation courses the young man of to-day who has been deprived of a high school training can accomplish as much as they, perhaps, and if he will begin while yet in his youthful vigor he is sure to reach the goal sought. The time for continuation courses should, if possible, as in Germany, consist of from one to four hours during the day, at the time most convenient for employers. This plan is being followed by many large corporations and in most cases all expenses are paid by the employers. The only alternative, of course, is evening instruction, but since excessive evening work has a tendency to lessen one's efficiency for daily service, I feel that provision for two hours of instructions three or four after- noons per week would greatly increase the efficiency of the em- ployees. Courses of Study The State Board of Accountancy in Pennsylvania has given a broad line of the subjects required of candidates for examina- tion, under the headings of business law and general accounting. It is necessary, however, for class-room use to subdivide and specialize by the addition of other allied studies. In my opin- ion the following subjects should be included in an evening course, admission to same implying the usual credits and a thor- ough knowledge of bookkeeping, some of which should be com- pulsory and others elective, according to the student's previous training, present occupation, and future work : ( 1 ) Advanced accounting, preparatory for practice or for C. P. A. examinations, including auditing and investi- gations, systematizing, etc., as outlined by the board. (2) Business law, elementary and advanced, as outlined by the board. (3) Advanced commercial arithmetic, covering those divisions of chief importance to the accountant. (4) Principles of political economy. (5) Banking, credit and investments. (6) Private finance, including corporate organization and management. (7) Science of merchandising, including advertising and salesmanship. II (8) Real estate and conveyancing, coverii^g the practice in* Pennsylvania. (9) One modern commercial language (German, French or Spanish). ( 10) English with special attention, to business usage. (11) Commercial and industrial geography and history. (12) Business organizatioa and management. (13) Transportation and puUic service corporations. (i4)t Insurance principles, insurance law, organization and management of insurance companies. (15) Foreig» exchange and foreign trade. Note. — Other subjects should be included for per- sons desiring to specialize for employment in definite branches of commerce or industry. While the various state boards of accountancy are making ample provision for young men who are favored by city resi- dence, there are thousands of capable, ambitious men in other cities who cannot avail themselves of the privileges granted by our evening schools. What is to be done for them? It is true that extension courses are being given with success by various individuals and institutions, but since these courses are not recog- nized by the examining boards, the student is in doubt as to the exact status of such a course after he has completed it. In connection with my own extension course I get hundreds of letters from young men seeking trustworthy information about the accountancy profession. They want to know how to get started in the work, what its future possibilities are, how they can prepare for C. P. A. examination, and whether my course is recognized by any board of examiners. I point out to them that only accredited residence courses are recognized and that in lieu of this, experience is a necessity; yet there is no doubt that a good extension course is advisable for anyone preparing for the State examination or for successful practice. The rules of the board in the matter of registration are of interest also because c^f the diiiculty experienced by students in complying therewith. The large attendance of students in ad- vanced evening courses renders their registration in the office of public accountants an impossibility, and even when a student is registered he may not be called upon to render any service to his preceptor. Many accountants do not care to accept registra- tions on this basis, while others may do so with hesitancy. My 12 point is not one of critioism btit of expediency. What is to be •done for the student who cannot secure a preceptor and there- fore must fiorego the benefits accruing to him, just because his acquaintance or influence is not sufficient to command attention? Law students at the University of Pennsylvania are permitted to register with the Dean of the Law School, and the same privilege for students of accountancy would seem like a wise provision. In such a case succe^ful candidates in the C. P. A. examinations might «ven have their certificates withheld until a required term o^f experience had been obtained. Let me outline what in my opinion should constitute the train- ing of the future account aiit. (i) For the young man of means: (a) The regular high school course. (b) Four-year course of the Wharton School of Fi- nance and Commerce, University of Pennsylvania. (c) Three-year course in a recognized evening school of commerce, accounting and finance, specializing in accounting and allied subjects. (d) At least one year as bookkeeper in the office of some large corporation. (e) Experience on the staff of a certified public ac- countant. (/) The C. P. A. examination. Note. — In case a liberal university course is sub- stituted for (b) then (c) should be extended and even preceded by a good business school course. (2) For the High School Graduate: (a) The regular high school course. (b) Complete course in a good business school, unless this course has been covered in (a). (c) Four-year courses (three evenings per week) in a recognized evening school of commerce, accounts and finance. (d) At least two years of experience in the accounting office of some business concern. (e) At least two years of experience on the staff of a certified public accountant. (/) The C. P. A. examination. •13 (3) Pot the Elementary School Graduate with a part or no high school training, who has to forego that privilege. (a) Complete course in a good business school. (b) Employment in the office of a good business con- cern. (r) Continuatbn study of selected subjects in evening high school or preparatory school for two, three or four years until admission is gained to the (rf) Four-year course, (three evenings per week) in a recognized evening school of commerce, accounts and finance. (e) Soon as capable to join the staff of a certified pub- lic accountant. (/) The C. P. A. examination when quah'fied. ig) Continue to read both technical and general liter- ature. The ultimate success of each student under the three courses above outlined may or may not vary, as that depends largely upon his own initiative, but in any case the person who would succeed as an accountant must be up and doing, must attend strictly to business, must conserve his health, must be honest and trustworthy, and must give satisfaction to his clients. In the above outlines the matter of registration with a preceptor is im- plied, though in the case of an experienced accountant that is not a necessity. I can only repeat that business is now complex, intricate, scientific, and the schools which attempt to teach it need a greater equipment than was required heretofore. Commerce is now dignified by a seat in the President's Cabinet, and account- ancy is recognized in all government departments ; therefore the need for our advanced evening schools is more than ever ap- parent, and we expect them to grow and become more proficient in work as the years advance. In closing let me say that greatness will never come to the accounting profession without intelligent effort, dignified methods, efficient service, thoughtful progress, harmonious co- operation ; and while the year is still young it would not be out of order for us to resolve that this year shall be for each of us one of service in the interests of our profession and in the ad- vancement of educational standards. 14 1 Date Due