U88SR* arm it ucation Department Bulletin Published fortnightly by the University of the State of New York Entered as second-class matter June 24, 1008, at the Post Office at Albany, N. Y., under the act of July 16, 1894 No. 487 ALBANY, N. Y. January 15, 1911 CERTIFIED PUBLIC ACCOUNTANT SYLLABUS * Definitions and distinctions Subjects of study Law Theory of accounts Special theory Practical accounting Auditing Certified public accountants law. Notes on the law Bibliography £ / /*, page 3 4 4 5 6 7 7 9 10 1 1 ALBANY UNIVERSITY OF THE STATE OF NEW YORK STATE OF NEW YORK EDUCATION DEPARTMENT Regents of the University With years when terms expire 1913 WhitElaw Reid M.A. LL.D. D.C.L. Chancellor New York 1917 St Clair McKelway M.A: LL.D. Vice Chancellor Brooklyn 1919 Daniel Beach Ph.D. LL.D. - — f Watkins 1914 Pliny T. Sexton LL.B. LL.D. ' ■ Palmyra 1912 T. Guilford Smith M.A. C.E. LL.D. - Buffalo 1918 William Nottingham M.A. Ph.D. LL.D. Syracuse 1922 Chester S. Lord M.A. LL.D. - New York 1915 Albert Vander Veer M.D. M-.A. Ph.D. LL.D. Albany 1 911 Edward Lauterbach M.A. LL.D. New York 1920 Eugene A. Philbin LL.B. LL.D. New York 1916 Lucian L. Shedden LL.B. LL.D. Plattsburg 1921 Francis M. Carpenter Mount Kisco Commissioner of Education Andrew S. Draper LL.B. LL.D. Assistant Ccmmissioners Augustus S. Downing M.A. Pd.D. LL.D. First Assistant Charles F. Wheelock B.S. LL.D. Second Assistant Thomas E. Finegan M.A. Pd.D. Third Assistant Director of State Library James I. Wy-er, Jr, M.L.S. Director of Science and State Museum John M. Clarke Ph.D. D.Sc. LL.D. Chiefs of Divisions Administration, George M. Wiley M.A. Attendance, James D. Sullivan Educational Extension, William R. Eastman M.A. M.L.S. Examinations, Harlan H. Horner B.A. Inspections, Frank H. Wood M.A. Law, Frank B. Gilbert B.A. School Libraries, Charles E. Fitch L.H.D. Statistics, Hiram C. Case Trades Schools, Arthur D. Dean B.S. Visual Instruction, Alfred W. Abrams Ph.B. c /W?? K no. f f 7 Education Department Bulletin Published fortnightly by the University of the State of New York Entered as second-class matter June 24, 1308, at the Post Office, at Albany, N.Y., under the act of July 16, 1894 No. 487 ALBANY, N. Y. January 15, 1911 CERTIFIED PUBLIC ACCOUNTANT SYLLABUS DEFINITIONS AND DISTINCTIONS Accountancy is a profession, the members of which, by virtue of their general education and professional training, offer to the com- munity their services in all matters having to do with the record- ing, verification and presentation of facts involving the acquisition, production, conservation and transfer of values. The profession of accountancy received its first official recogni- tion in the United States in. 1896 through the enactment, by the Leg- islature of the State of New York, of the certified public accountant law T . The law provides for the issuance of a certificate by the Re- gents of the University of the State of New York, conferring the right to use the title certified public accountant. A copy of the law, together with notes thereon and rules for the examination of persons applying for certificates is included herein. The rules provide that an applicant for the certificate of certi- fied public accountant must be a graduate of a registered high school or have an education equivalent to such graduation. The equivalents are fully stated in the rules. The rules also provide, as a test of professional education, for examinations in law, theory of accounts, practical accounting, and auditing. For the information of candidates, the general scope of the branches of professional education, in which examinations are held, and their relation to each other, are stated herein. Law, excluding criminal law, is a science defining the rights, lim- iting the powers and providing rules for adjudicating the differ- ences of those engaged in the acquisition, production, conservation and transfer of values. Commerce furnishes the greatest oppor- tunity for the exercise of its rules, although all transactions involv- ing values are more or less under its influence and control. The science of the law, without attempting to trace its application in detail, extends from elementary principles, governing the acquisition and 4 NEW YORK STATE EDUCATION DEPARTMENT disposition of property, to the creation and regulation of artificial persons, known as corporations. In many cases, it even prescribes the forrn of financial records and of the statements in which the results must be displayed ; and, finally, in cases of inability to ar- rive at settlements by private negotiation, the courts adjudicate and decide all differences involved in money settlements. The science of law, as a subject of study, provides the foundation and states the broad general rules to which all financial transactions must conform. Accounting is the part of accountancy that has to do specifically with the recording and presentation of financial facts. Thus, under this branch would fall the designing and installation of a system for recording the financial facts of an enterprise, and the preparation of all statements necessary to set forth the facts for the guidance of the proprietors and others. Accounting has a theory, or body of underlying principles, and a practice. Theory of accounts , as a subject of study, includes the principles of accounting, from simple bookkeeping to intricate accounting procedures necessary in modern financial and industrial organi- zations. Practical accounting, as a subject of study, includes the applica- tion of the theory of accounting. Without such application the study of theory of accounts would afford but little more than an interesting diversion. The results for which accounting has been developed are obtained only in accounting records, procedures and statements that depend upon the theory of accounts. Auditing, the final branch, as a subject of study, includes the principles and practice involved in the verification of accounting records. SUBJECTS OF STUDY The outlines hereinafter given cover, generally, the scope of the work upon which the candidates will be tested. In the preparation of the examination papers, a professional training extending over a period of time similar to that required in the other professions, will be assumed. LAW The examination in law should demonstrate that the applicant has received training in the science, thus enabling him to reason from the law’s viewpoint, with particular reference to those sub- divisions thereof which state the principles of the law that govern business relations. The historical side of the law, criminal law. CERTIFIED PUBLIC ACCOUNTANT SYLLABUS 5 and the technicalities of jurisdiction and procedure will be touched upon only incidentally. Briefly, the examinations will be upon the following subjects: Law, divisions of; domestic relations; property, divisions of, estates therein, liens thereon ; trusts and their purposes ; methods of acquiring title to property by descent ; rule of descent ; distribu- tion of personalty, by marriage, by occupancy, by devise, by deed. Contracts, including special contracts, such as guaranty, in^ demnity and suretyship, warranty, of sale, arbitration and award ; insurance, fire, life and marine. Agency, including special kinds of agents. Bailments, including common carriers. Partnership, joint stock association, limited partnership. Corporations, creation of, merging of, consolidations, reorgani- zations ; receivers, dissolution. Bankruptcy, assignments; insolvency. Public service commissions law; interstate commerce act. Negotiable instruments law; interest and usury. THEORY OF ACCOUNTS In the branch of study known as theory of accounts are in- cluded all accounting principles. For the purpose of study and ex- amination, the subject may be considered in three divisions, viz: Elementary theory. Under this division of the subject are grouped the principles underlying all bookkeeping expedients for recording and stating financial transactions. The division covers the principles of accounting in so far as they relate to double entry and other methods of recording business transactions, the opening of books, chronological records, and the preparation of account- ing statements. In constructive accounting, the work extends from the basic records of journal and ledger to the designing of such columnar books of original entry as the cashbook, purchase book, sales book, bills receivable book, bills payable book and voucher register, and the development of the ledger in form, ruling, classi- fication and division, to meet the needs of large enterprises. The special expedients that are essentially of a bookkeeping nature, such as controlling accounts, consignment accounts, private ledger, petty cash system, etc., are included in this division. The division will also include the arithmetical processes neces- sary to carry into effect ordinary bookkeeping operations, such as the calculation of equated date of* payment, the averaging of accounts, the calculation of discount and interest, etc. 6 NEW YORK STATE EDUCATION DEPARTMENT A familiarity with the forms of business organization known as sole proprietorship and partnership will be expected, including such special bookkeeping records as are necessary properly to state all capital and profit and loss transactions. Advanced theory. Under this division of the subject are in- cluded the principles involved in the recording and stating of ac- counting facts, other than those stated in the foregoing division, necessary in the corporate form of business organization. Thus, the division includes the theory involved in the opening of corporation records ; the issue and treatment of capital stock of various classes and preferences ; the treatment of reserves and funds, including sinking funds ; the treatment of evidences of in- debtedness secured by liens, dividends, syndicate operations ; the retirement of stock and bond issues ; the dissolution of corpora- tions ; and, in general, all the principles that underlie the higher and more intricate branches of accounting. This division will also include the advanced phases of account- ing required in sole proprietorships and partnerships that may not properly be included in the division of elementary theory. SPECIAL THEORY This division is intended to include the application of the ele- mentary and advanced principles of the foregoing classifications to special classes of accounting, and is inclusive of all subjects other than those before stated. As an indication of the scope of the division, although not limiting the subjects, the following are mentioned : Cost accounting. A thorough knowledge of the principles underlying cost accounts will be expected, including organization, determination of costs of departments and by units of product, and the treatment of overhead or burden in the various manners required to meet conditions. It is not necessary for the candidate to be an experienced cost accountant, capable of installing sys- tems, but he will be expected to have a thorough understanding of the principles underlying such systems. Public service accounting. It is expected that the candidate will be familiar with the development of accounting to meet the needs of common carrier, gas, electric light and water companies, and the requirements of the interstate commerce act and the pub- lic service commissions law. -Municipal and government accounting. It is expected that the candidate will be familiar with the methods of municipal and CERTIFIED PUBLIC ACCOUNTANT SYLLABUS 7 government accounting, and that he will be able to state the un- derlying theory thereof, and show its differentiation from commer- cial accounting. Insurance accounting. Under this head will be included ques- tions upon the accounts of insurance companies, including life, fire, accident and marine insurance, particularly as affected by the laws of the State of New York. Accounting of executors, administrators and trustees. Under this division will be included the theory involved in the accounts of executors, administrators and trustees and, in general, the ac- counts of those who act in a fiduciary or representative capacity. Miscellaneous. The accounts of friendly societies, telephone companies, and other special subjects, will be included from time to time as conditions require. PRACTICAL ACCOUNTING Under this subject of professional study will be considered the application of principles to states of fact given in the form of propositions. In a general way it will include, in all forms of business organi- zation, the opening of books of account, the construction, instal- lation and operation of accounting records, the closing of account- ing records for the determination of profit and loss, or income, the financial condition, and the preparation, in correct technical form, of all statements and documents for the presentation of ac- counting facts. Incidental to the foregoing, familiarity will be expected with all arithmetical and accounting expedients necessary to give effect to the subjects of accounting. AUDITING The accounting record is made, presumably, in accordance with the rules of law and with the theory and practice of accounting, with no omissions of essential facts and without fraud. The veri- fication that is. necessary to establish the foregoing condition in respect to the accounts of any individual, partnership or corpora- tion, is known as auditing. Auditing, as a subject of study, includes the principles and practice necessary to guard against error, intentional or uninten- tional and fraud. A knowledge of the office procedures that are 8 NEW YORK STATE EDUCATION DEPARTMENT necessary to the economical handling of the work and of methods of presenting results in reports and certificates is necessary. The subject may conveniently be divided into three parts, viz: Principles. This division of the subject includes the rules that should govern the accountant in establishing the accuracy of the accounting record. The means to be employed in the different classes of audits, the points to which particular attention should be directed, the scope of the verification, and the consideration of ways and means to detect and guard against fraud, properly fall under this division. More particularly, it includes the steps neces- sary to substantiate the original accounting record, the determina- tion that the ledger or ledgers, and the statements prepared there- from, correctly set forth the results of the accounting record as disclosed in the books of original entry. The scope should extend from a detailed audit, involving the sub- stantiation of every accounting record to the special investigations or examinations that have to do with a particular phase of an ac- counting record, and the scope presupposes a familiarity with all methods of business organization. The student should familiarize himself with the expedients that are most commonly used in the commission of fraud and the meth- ods that are necessary for its detection and prevention. In general, this division should include all that is essential in the establishment of the accuracy of accounting records, with the exception of the working practice and the presentation of results. Practice — office procedures. The successful conduct of audits, examinations, and investigations renders necessary, in ad- dition to the matters covered in the foregoing classification, a knowledge of the accountancy office methods essential for the eco- nomical conduct of the work. Included in this may be mentioned the working papers . that are prepared by the accountant in the course of an audit, and which form the basis of his report. These papers should be rich in detail, and when filed provide the material for fuller detail upon any phase of the audit if it should be called for, and serve as a basis for future work in auditing or accounting in the same undertaking. The rules that should govern the conduct of junior and senior accountants, their assignments in work, and the general plan that should be followed in typical audits and exam- inations, are matters with which the candidate should, to a con- siderable extent, be familiar, and with a given state of facts he should be able to state a satisfactory mode of working procedure. CERTIFIED PUBLIC ACCOUNTANT SYLLABUS 9 Under this division of the subject is included a consideration of the forms, statements, and procedures that are necessary to ob- tain the results of the audit. For example, the use of analysis sheets and papers, the methods of analysis of various accounts, the construction of controlling accounts, and the other expedients necessary in the actual practice of auditing, will be included. Practice — reports and statistics. The practice that has been outlined in the foregoing classification has to do with the ac- countant’s own staff and office, and does not include the practice that is necessary to bring the results to the attention of clients and others for whom the information may be prepared. The presenta- tion of facts disclosed in audits, examinations and investigations may include detail extending from a mere certificate to a volumin- ous report, and the value thereof will depend to a considerable ex- tent upon the proper presentation of such detail. Therefore, the candidate will be expected to be familiar with the principles of presentation, and with the construction of state- ments and the uses of statistics. He will be expected to be able to use the principles of presentation in certificates, statements, and reports. It is not intended to limit this division of the subject to audit- ing proper, but there may be included the principles and practice involved in the presentation of all accounting facts. CERTIFIED PUBLIC ACCOUNTANTS General Business Law, chapter 20 of the consolidated laws. Became a law February 17, 1909 ARTICLE 8 PUBLIC ACCOUNTANTS § 80 Certified public accountants. Any citizen of the United States, or person who has duly declared his intention of becoming such citizen, residing or having a place for the regular transaction of business in the State, being over the age of 21 years and of good moral character, and who shall have received from the Re- gents of the University a certificate of his qualifications to practise as a public expert accountant as hereinafter provided, shall be styled and known as a certified publiq accountant; and no other person shall assume such title, or use the abbreviation C. P. A. or any other words, letters or figures, to indicate that the person us- ing the same is such certified public accountant. IO NEW YORK STATE EDUCATION DEPARTMENT § 81 The Regents to make rules. The Regents of the Uni- versity shall make rules for the examination of persons applying for certificates under this article, and may appoint a board of three ex- aminers for the purpose, which board shall be composed of certified public accountants. The Regents shall charge for examination and certificate such fee as may be necessary to meet the actual expenses of such examinations, and they shall report, annually, their re- ceipts and expenses under the provisions of this article to the State Comptroller, and pay the balance of receipts over expenditures to the State Treasurer. The Regents may revoke any such certifi- cate for sufficient cause after written notice to the holder thereof and a hearing thereon. § 82 Misdemeanor. Any violation of this article shall be a misdemeanor. NOTES ON THE LAW Certificates. The use of the abbreviation C. P. A. or any other words, letters or figures to indicate that the person using the same is a certified public accountant is prohibited except to those holding Regents certificates. The C. P. A. certificate is granted only to an applicant at least 25 years of age who has had three years satisfactory experience in the practice of accounting, one of which shall have been in the office of an expert public accountant. Certificates will be revoked for cause. Preliminary requirements. The Regents 60 count qualifying certificate is required for admission to the C. P. A. examinations ( see Handbook 23). Professional requirements. A candidate for the C. P. A. cer- tificate must be more than 21 years of age and of good moral char- acter. He must pay a fee of $25 and must take all four subjects at a single examination. On March 31, 1910, the Regents amended their revised rules by the adoption of § 365 English essential for qualifying certificates. Hereafter all applicants for qualifying certificates upon equivalents from foreign countries other than those in which English is the language of the people, all or any part of which equivalent certificates are earned or issued in said foreign countries, shall pass the Regents examination in second year English. CERTIFIED PUBLIC ACCOUNTANT SYLLABUS II Examinations. The three examiners are appointed to serve for one year. Since 1897 the board has been composed of certified public accountants. Two examinations are held annually in January or February and June respectively. There are five sessions of three hours each : (1) theory of accounts, 3 hours; (2-3) practical accounting, 6 hours; (4) auditing, 3 hours; (5) commercial law, 3 hours. Applications should be made at least 10 days in advance to the New York State Education Department, Albany, N. Y. Dates 1911 1912 Jan. 31-Feb. 2 . Jan. 30-Feb. 1 June 27-29 June 25-27 1913 1914 Jan. 28-30 Jan. 27-29 June 24-26 June 23-25 1915 Jan. '26-28 June 29-July 1 Flaces New York, Albany, Syracuse, Buffalo. Each candidate is notified as to the exact place. Daily program Morning Afternoon Tues. Wed. Thurs. Theory of accounts Practical accounting (pt 2) Commercial law Practical accounting (pt 1) Auditing Black. * Bouvier. Broom. Fishback. Robinson. Heydecker. Jones. Martindale. Taylor. Tiedeman. Warvelle. Wood. Carter. Fallows. Jessup. McClellan. BIBLIOGRAPHY LAW Foundations and definitions Law Dictionary Law Dictionary Legal Maxims Manual of Elementary Law Elementary Law Real property Mechanics’ Lien Law for the State of New York Law of Mortgages Law of Conveyancing Landlord and Tenant Real Property Vendor and Purchaser of Real Property Law of Landlord and Tenant Disposition of estates of persons deceased Transfer Tax Law Collateral Inheritance Transfer Tax Law Surrogate Practice Surrogate Law and Practice 12 NEW YORK STATE EDUCATION DEPARTMENT Anson. Beach. Bishop. Brown. Lawson. Parsons, Wood. Contracts Law of Contracts Modern Law of Contracts Law of Contracts The Statute of Frauds The Principles of the American Law of Contracts Law of Contracts Limitations of Actions Mechem. Story. Benjamin. Jones. Baylies. Biddle. Cooke. Parsons. Richards. Wood. Parsons. Browne. Knight. Agency Law of Agency Law of Agency Sales of personal property Principles of Sales Law of Mortgages on Personal Property Guaranty and suretyship Sureties and Guarantors Insurance Law of Insurance Life of Insurance Law of Marine Insurance Law of Insurance Law of Fire Insurance Shipping Maritime Law, including the Law of Shipping Patent, copyright, trade-mark Law of Trademarks and supplement Patent Office Manual Elliott. Jones. Lawson. Bates. Mechem. Parsons. Beach. Taylor. Collier. Bailments Law of Railroads Law of Pledges Law of Bailments Partnership Law of Limited Partnership Elements of Partnership Law of Partnership Corporations Public Corporations Law of Private Corporations Bankruptcy Law of Bankruptcy Public service commissions law and interstate commerce act Ivins & Mason. The Control of Public Utilities Negotiable instruments Bigelow. Bills, Notes and Checks Daniel. Negotiable Instruments Selover. Negotiable Instruments Law CERTIFIED PUBLIC ACCOUNTANT SYLLABUS 13 ACCOUNTING Accountancy Accountants’ Compendium Accountants’ Library (51 volumes) Accountant’s Manual Accounting Practice Accounting Problems Accounting in Theory and Practice Accounts, their Construction and Interpre- tation Accounts of Executors and Testamentary Trustees Advanced Accounting American Accountants’ Manual Anatom) 7- of a Railroad Report Auditing Auditing (American edition) Auditing Auditors, their Duties and Responsibilities. Bookkeeping for Accountant Students.... Business Education and Accountancy ■Classification of Expenditures for Addi- tions and Betterment Corporate Finance and Accounting Corporation Accounting and Law Depreciation of Factories Depreciation, Reserve and Reserve Funds.. Elementary Bookkeeping in Theory and Practice Encyclopedia of Accounting Expense Burden Factory Accounts Factory Organization and Costs Financing an Enterprise Funds and their Uses Goodwill and its Treatment in Accounts... History of Modern Banks of Issue Joint Stock Company Bookkeeping Journal of Accountancy Lectures on the Theory and Practice of Accounting '•*. Manufacturers’ Accounts Modern Accounting Modern Banking Methods Modern Business Corporations Newspaper Accounts Partnership Accounts... Practical Accounting Practical Auditing Practical Cost Accounting Quasi-Public Corporation Accounting and Management Railroad Administration Railroad Transportation Test Book of the Accountancy of Invest- ment Textile Manufacturers’ Bookkeeping for Counting-house, Mill and Warehouse. . . . 'The Accountants’ and Bookkeepers’ Vade Mecum Pixley Dawson Gee & Co. Gee & Co. Day Greendlinger Lisle Cole Hardcastle Dicksee Broaker & Chapman Woodlock Dicksee Dicksee Moull Pixley Dicksee Haskins Interstate Commerce Commission Bentley Rahill Matheson Dicksee Lisle Lisle Church Garcke & Fells Nicholson Cooper Cleveland Dicksee Conant Johnson Accountancy Publishing Co. Pace Eddis & Tindall Hatfield Barrett Wood Norton Child Wolff Renn Wood Mulhall Morris Johnson Sprague Norton Whatley NEW YORK STATE EDUCATION DEPARTMENT 14 The Modern Bank Fiske The Modern Trust Company Sterrett The Nature of Capital and Income Fisher The Philosophy of Accounts Sprague Theory of Accounts Hyans Trusts, Pools and Corporations Ripley Uniform System of Accounts for Gas Cor-1 porations j Uniform System of Accounts for Electrical ! Corporations f Uniform System of Accounts of Street and | Electric Railways J Public Service Commiss’on of New York