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Alvin R. Jennings: managing partner, policy-maker, and institute president.

ABSTRACT: Alvin R. Jennings (1905-1990) was a rare breed of an accountant. He was trained as a practitioner and rose to become a managing partner at Lybrand, Ross Bros. & Montgomery, but he kept a constant watch on the academic field of accounting research. Jennings served on the influential American Institute of Accountants' Committee on Auditing Procedure (1946-49) and later as the president of the American Institute of Certified Public Accountants (1957-58). This paper explores these activities and Jennings' contribution to the professional, academic, and institution discourse of the accounting discipline.

INTRODUCTION

... you have been-from all accounts-an inspiration and necessary leader, all the way from the 'research program' idea that you developed a half dozen years ago to your continual leadership ... In all matters, you have made your position known forcefully and clearly, and it can be said with no overstatement that you have been the sine qua non [italics added] of progress in the principles area since the latter 1950s [letter from Stephen Zeff to Alvin R. Jennings on June 22, 1964]. (1)

Alvin R. Jennings was born in West Orange, New Jersey, in 1905, where he remained a resident until his retirement in 1962. He spent his retirement in Miami, where he died in March 1990. His legacy is that of an institution builder at the American Institute of Certified Public Accountants (AICPA).

After graduating from high school in the 1920s, Jennings moved to New York City to attend Pace College (later Pace University), then a professional accountancy school located in Lower Manhattan. After graduation, Jennings began training as a public accountant with Lybrand, Ross Bros. & Montgomery. He passed the Certified Public Accountant (CPA) exam in New York in 1929 and, later, in his home state of New Jersey. Remaining with the same firm throughout his career, Jennings rose to the position of partner in 1940 and managing partner in 1954 [box 2, folder 28]. (2)

Throughout his career at Lybrand, Ross Bros. & Montgomery, Jennings was an active member of the accounting profession and, in particular, of the activities of the American Institute of Certified Public Accountants. At various points, Jennings served as the AICPA President, Vice-President, Ex-Officio of Council, Chairman of the Accounting Principles Board and on seven institute committees, the most influential of these being the Committee on Auditing Procedure. His other memberships included those of the American Accounting Association and of the Institute of Internal Auditors. Jennings also served on the Advisory Board of the Chemical Bank New York Trust Company (today JPMorgan Chase) and, during World War II, as the alternate Chief Supervisory Auditor in the third naval district of the US Armed Guard Center [box 2, folder 28].

Jennings took numerous speaking engagements across the country and published several accounting articles in such outlets as the Journal of Accountancy and The Accounting Review. He also co-authored the seventh edition of Montgomery's Auditing, the first American textbook on the subject. For his accomplishments and service to the accounting profession, Jennings was awarded an honorary doctoral degree from his alma mater and the AICPA Gold Medal, the Institute's highest honor, in 1962 [box 2, folder 28].

The accounting discipline abounds with prominent individuals. These tend to fall in one of two categories. There are those that have left lasting contributions in academia, such as Anthony Hopwood [Birnberg and Bromwich, 2013], Louis Goldberg [Parker, 1994], and Robert Anthony [Bimberg, 2011], and those that have left a lasting contributions in the profession, such as Paul Grady [Andrews, 1995], Marquis G. Eaton [2000], and Robert M. Trueblood [Bryson, 1976]. Accountants who have left a lasting contribution on the professional, academic, and institutional discourse of their discipline, however, are rare. Individuals such as A. C. Littleton [Edwards and Salmonson, 1961; Bedford and Ziegler, 1975; Gilbert, 2000], Frank Sewell Bray [Parker, 1980; Forrester, 1982], and George O. May [Grady, 1962; Paton, 1981; Stabler and Dressel, 1981] are notable exceptions.

Even more rare than those accountants contributing to professional, academic, and institution discourse of their discipline are those that advocate for the work of accounting academics as a platform for financial reporting standard setting. Jennings represents such an exception. (3) Whereas Littleton [1953] and May [1949] derived their accounting theory from current accounting practices and Bray [1953] looked towards developments in macro-accounts in the United Kingdom, Jennings experience, having risen to the President of the AICPA in 1957, and his knowledge of other practical sciences, such as architecture, law, and medicine, led him to argue for the establishment of a natural laboratory for accounting standard setting and a professional but "pure" research program into accounting [box 2, folder 21]. Accounting academics, most notably Raymond J. Chambers [1963], would later come to reiterate forms of this form of argument but it was Jennings who came to these conclusions as early as the late 1950s.

This article adds to this literature on accountants who have broken down academic and professional boundaries, by exploring Jennings' thoughts, activities and initiatives as he served on the Committee on Auditing Procedure (1946-49) and as the President of the AICPA (1957-58). To construct this narrative, it draws on previously unpublished archival material from the Alvin R. Jennings Papers Collection of the Florida Accounting Archive, stored at the George A. Smathers Libraries at the University of Florida. (4) The material was collected over a period of two weeks in March 2014.

COMMITTEE ON AUDITING PROCEDURE

The American Institute of Accountants (AIA), which became the AICPA in 1957, prepared the first memorandum on balance sheet audits in 1917. This pamphlet was amended and reissued in 1918, 1929 and 1936. The second revision of this pamphlet embraced the audit not only of the balance sheet but also of the income statement; the third revision changed the wording of the auditing function from the "verification" to the "examination" of company accounts. (5) Although the pamphlet set out the general procedures and goals of the auditing process, it lacked directions for solving those more complex issues that required considerable professional judgment. To offer further guidance, in January 1939, the AIA established the Committee on Auditing Procedure (CAP), which issued 54 Statements on Auditing Procedure (SAPs). These statements modified and expanded parts of the 1936-revised pamphlet and were codified in 1951, 1963 and 1972. The Auditing Standards Board, which superseded the CAP in 1972, issued this last codification as its initial Statement on Auditing Standards, which is still in use today [Vangermeersch and Chatfield, 1996],

The initial CAP board was made up of ten members and a secretary but, when Jennings joined in 1946, it had expanded to 15 members, several of whom wielded considerable influence. Among these, worthy of mention are: Carman G. Blough, a prominent accounting intellectual who was appointed first Chief Accountant at the Securities and Exchange Commission [Cooper, 1982] and who served as the Institutes Director of Research; Paul Grady, a partner at Price Waterhouse's New York office (formerly of Arthur Andersen) and active AICPA member, who served as the Chairman; and Jacob Seidman, founder of Seidman & Seidman (later BDO Seidman). Jennings served first as a member and then as Chairman until 1949, contributing to the committee's deliberations on two critical publications on auditing and internal control, respectively. The first publication was SAP23, Clarification of Accountant's Report When Opinion is Omitted, and the second was AIA's first document on internal controls, Internal Control: Elements of A Co-ordinated System and Its Importance to Management and the Independent Public Accountant.

Clarification of Accountant's Report When Opinion is Omitted: SAP23 was issued in December 1947. The problem, before the committee's deliberations, had been that financial statements issued without an explicit auditor opinion as to the fairness of the accounts tended to cause undue uncertainty among any third parties who read them. The clients' increasing tendency to distribute unsolicited financial statements to third parties had caused this to become a sensitive issue. Since the clients could not be forced to inform their auditors as to the use of their financial statements, the committee's solution was to require that all financial statements, regardless of whether they were issued on stationery or in a report by an independent certified public accountant, would contain a "clear-cut indication" as to the extent of the examination and an audit opinion. Under these new rules, the auditors' role was limited to four options when preparing financial statements:

... [1] Express an unqualified opinion; [2] express a qualified opinion; [3] refuse the expression of an opinion and furnish reasons for the denial; [4] state that the financial statements were prepared from the books without audit or verification [A. Frank Stewart presenting Jennings to the Virginia Society of Public Accountants, box 1, folder 12, p. 3].

The CAP's position on this issue represented an about-turn from its first SAP, Extension of Auditing Procedure, which had been issued in September 1939. In the case of a negative audit opinion or insufficient auditing work, public accountants could previously limit their reports to a statement of the findings and omit expressing an opinion altogether. This change, requiring an audit opinion of some kind, entailed a considerable undertaking for the auditors and was thus understandably met with some resistance from several AIA members. When SAP23 came up for revision during an annual meeting in October 1949, one of its opponents introduced a formal motion to downgrade the statement from a rule to a recommendation, which would not have required compliance. A majority of the AIA members present at the meeting, however, voted against this motion. As a result, some changes were made to the wording but the four auditor options introduced in the initial statement were kept in place [box 1, folder 12].

SAP23's new audit requirements were also controversial among the larger accounting profession. This proved to be a considerable hurdle for the AIA, as its statements were only binding for its members. For non-member CPAs, the choice as to whether to adopt a particular standard rested with the individual state accounting societies [for more on the political situation between the AIA and state societies at the time, see Previts and Merino, 1998]. The small number of non-certified accountants was not bound by either their state society or the AIA. This meant that the onus of legitimizing new SAPs as generally accepted auditing standards rested with the AIA members. Jennings, who had been influential in drafting SAP23, thus took it upon himself to advocate the statement among state societies. From 1950 through to 1953, Jennings visited and spoke at the annual meetings of the Georgia, Pennsylvania, Maryland, Massachusetts, Virginia, Maine, Tennessee and California state societies (in this order).6 In April 1951, the AIA also hosted a conference in Hartford, Connecticut, at which Jennings was one of the main speakers. The Maine, Massachusetts, New Hampshire, Rhode Island and Vermont societies were official sponsors of this event and several of their senior members were in attendance and on the program [box 1, folder 2, 8, 9, 10, 11, 15, 16, 18].

Jennings presented two papers, "Statement 23 and Accountants' Reports" and "What You Can Do About Auditing Statement No. 23," at various annual meetings and at the AIA conference (the latter paper was published in the Massachusetts Society of Certified Public Accountants News Bulletin in October 1951) [box 1, folder 2, 8, 9, 10, 11, 15, 18]. There were three broad themes to these two conference papers. The first addressed the serious deficiencies in auditing practice that had been allowed to persist due to the slow adoption of SAP23. Swift compliance among small and large accounting firms, their clients and the auditing profession was now paramount. Jennings also maintained that the slow adoption of SAP23 did not diminish the validity of its requirements and that similar problems had been encountered with other SAPs. It was therefore his position that:

... any auditor may not, in good faith, hereafter consider an engagement to have been completed in accordance with generally accepted auditing standards if he has ignored Statement 23 in drafting his report [box 1, folder 8, p. 5].

The second theme advocated urging the audience to make tangible efforts to have SAP23 adopted in their state societies. Jennings was sympathetic to the fact that the four-opinion option presented a new auditing concept, as opposed to extending an existing one, and, as such, compliance would not come over night but would have to be deliberate and gradual. State societies were in a unique position to help in this by providing education at the local level. This was the approach Jennings preferred, as the AIA's resources were limited and any increase in disciplinary action could create further ill will.

The third theme was more practical. Included in Jennings' papers were guidelines for the application of SAP23 in auditing practice and examples of partial examinations, piecemeal opinions, interim reports, accounts on a cash basis and unaudited statements [box 1, folder 8].

Substantial archival evidence suggests that Jennings' efforts to persuade accounting practitioners about the merits of SAP23 were a success. Both papers were well received among the hundreds of accountants from over 17 state societies that attended his presentations. In correspondence from the events' attendees, members, and organizers, Jennings is described as being the "best prepared" accountant to speak on SAP23, an authority on auditing in general and a lucid speaker [box 1, folder 2], His arguments are described as scholarly and convincing [box 1, folder 8], Several attendees described the strength of his arguments as the "highlight" of their meetings. In at least some state societies, there were some indicators that a motion on the adoption of SAP23 would be forthcoming and that members anticipated that it would be successful [box 1, folder 7, 10, 16]. This is not to say that there were no naysayers. For example, after a presentation to the membership of the Pennsylvania Institute of Certified Public Accountants, Jennings received the following message:

We are grateful to you for your excellent presentation of the subject, "Auditing Procedure Statement No. 23." The fact that its provisions were unanimously endorsed by those present speaks more emphatically than anything I can say. We had no expectations of unanimous approval. The matter has been submitted to the membership for mail vote. There are still some objectors, --including Ben Goldenberg, whose letter I read--but I am hopeful of approval by a large majority [letter from William R. Winn to Alvin R. Jennings, July 3, 1951, box 1, folder 10, p. 6]

Internal Control: Elements of A Co-ordinated System and Its Importance to Management and the Independent Public Accountant: The AIA's first statement on internal controls, its second critical publication, was issued in 1949. The increased scope and size of business had made conventional audits, in which each transaction was reviewed, both impractical and excessively costly [for further discussion on the potential causes for the increase in the need of internal controls, see Hay, 1993]. The statement on internal control was the AIA's response to this problem. The CAP saw the responsibilities of auditors and management as intrinsically interlocked and argued that higher quality financial statements, efficiency gains and cost reductions could be accomplished if internal controls were included in the standard audit engagement. The document provided guidance on the design and audit of internal controls and schematics of internal control structures. The most striking feature of the document was its exceptionally broad definition of the internal control system:

   Internal control comprises the plan of organization and
   all of the coordinate methods and measures adopted
   within a business to safeguard its assets, check the accuracy
   and reliability of its accounting data, promote
   operational efficiency, and encourage adherence to prescribed
   managerial policies [p. 6].


The internal control statement was a recommendation, as opposed to an official standard requiring compliance, so there was less of an impetus for Jennings to promote it as reflected in his speaking engagements. He gave one presentation at a meeting of the Controllers Institute in his home state, New Jersey, and another at a Graduate Study Conference in California in July 1950 [box 1, folder 3], The California Society of Certified Public Accountants hosted the conference at Claremont McKenna College. The conference was widely attended, with representatives of industry and academia and over 30 regional and all national accounting firms, such as Ernst & Ernst, Haskins & Sells and Peat, Marwick, Mitchell & Co [box 1, folder 7],

Jennings gave his address on internal controls, while Lawrence L. Vance, professor at the University of California Berkeley, gave his on auditing and Thomas H. Sanders, professor at Harvard University, gave his on developments in accounting principles. Both Vance and Sanders would have shared Jennings' positive disposition towards academic research, as the former wanted to bring new statistical sampling techniques into auditing practice and the latter served on various research committees [box 1, folder 7], Jennings [1950, 1953] later republished parts of this presentation and those on SAP23 in two articles published in the Journal of Accountancy.

Jennings' presentation on internal controls, "The Significance of Internal Control to the Independent Public Accountant," returned to familiar themes from his presentations on SAP23. Jennings' overarching message was that audit practice had not kept up with the growth of the business organization, which had led to significant deficiencies in contemporary audit practice. According to Jennings, management needed to design new internal controls, adjusted for the increased size and complexity of operations, and auditors had to be retrained to evaluate the adequacy of these controls on a systematic basis, to fully address this problem. Jennings envisioned that the "auditors of tomorrow" might need to learn how to perform such tasks as statistical analysis, time and motion studies and the examination of operating reports. As with the new audit requirements, Jennings believed that state societies were well placed to provide the necessary training locally. To get this effort started, he also included some tentative guidelines on what these "future" audit procedures might entail [box 1, folder 7].

Jennings considered SAP23 and the AIAs first statement on internal controls as the products of a long, careful and deliberate action by experienced accounting practitioners who had given unselfishly of their time to the advancement of accounting. Although the latter document was not binding to non-AIA members, Jennings stated that he considered both to be integral parts of the wider corpus juris of contemporary accounting practice [box 1, folder 12]. It is certainly the case that both publications were quite novel and, as evidenced in the archival material, that Jennings enjoyed success in promoting their use. The AIA, however, would later have to backtrack on its broad definition of internal controls. External pressures from the profession led the CAP to introduce a much narrower definition of internal controls in SAP29, issued in 1958. The 1958 approach was to divide internal controls into accounting and administrative ones. Auditors were responsible for evaluating the adequacy of the former, whereas management was responsible for the latter. This meant that matters such as operational efficiency and adherence to managerial policies were again moved away from the purview of the public accountant [for more about these events, see Hay, 1993].

THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS

After several years of service, in various capacities, at the AICPA, Jennings was elected president during its annual meeting held in New Orleans, Louisiana, in October 1957. Marquis G. Eaton, the outgoing president, introduced Jennings to a crowd that included several influential members, such as John L. Carey, John W. Queenan and Andrew Barr. The latter would become the fourth and longest serving Chief Accountant of the SEC [Previts and Flesher, 1996], Jennings' presidential address was well received and published in the Journal of Accountancy, shortly after the annual meeting, as "Present-Day Challenges in Financial Reporting" [1958b]; an edited version was later republished in The Accounting Review as "Accounting Research" [1958a].7 The presidential address outlined a new approach to accounting standard setting and would come to represent a pivotal departure from the conventional activities at the AICPA for the next decade [box 2, folder 21]. Jennings' began his speech praising the AICPA role in the formation of the accounting profession:

In a very real and important sense our Institute is the embodiment of an ideal. In concept, it is a symbol of dedication of a responsible and significant group to the practice of a profession in a manner truly compatible with the public interest. In form, and in operation, it reflects a high order of democracy under which the strength and prestige of the individual derive, in large measure, from the imagination, courage and independence of the whole and the respect of the group rests upon the acts of the individuals [box 2, folder 21, p. 1].

The second part of Jennings' presidential address recapped the processes by which the AICPA had hitherto developed accounting rules and procedures. The Committee on Accounting Procedure and Research Department had been established in 1939, at the same time as the Committee on Auditing Procedure. Its mission had been akin to that of its auditing counterpart: to develop generally accepted principles and, in so doing, curtail the differences and inconsistencies that were permeating practice. As issues arose, the committee, with its Chairman and twenty members, had issued 48 Accounting Research Bulletins addressing accounting problems on an ad-hoc basis. Given the tremendous scope of their task, Jennings felt that this group of people had done a remarkable job, but he had now come to question whether the AICPA's approach to the standard setting process was the best alternative for going forward [box 2, folder 21].

The third part of Jennings' presidential address outlined his vision for the AICPA's standard setting process. Jennings saw the absence of a natural laboratory--a place in which new accounting ideas could be tested against old ones without consequences--as the single most important obstacle to productive standard setting. In the field of medicine, biochemists have the opportunity to experiment in laboratories and then have trained physicians use their findings in practice. In the field of law, established concepts are retested in each trial. In the held of architecture, small-scale designs can be tested before larger projects are undertaken. The AICPA had both failed to replicate the setting found in most other practical sciences and to appoint practitioners, as opposed to academics, to lead most of its attempts [box 2, folder 21].

To establish a natural laboratory within the standard setting process in accounting, Jennings recommended that the AICPA should undertake a "pure" research program into accounting principles that would be unrestrained by contemporary accounting practices. Academics would staff this program and input would be solicited from members, industry and the profession. Unlike the volunteers that had been serving on the committees on auditing and accounting procedures, these academic members would be salaried full-time employees. This program would have benefited from being independent from outside pressures, subject to less time constraints and more focused to tackle fundamental accounting problems. The AICPA Council would still retain its prerogatives and be tasked with approving the pronouncements issuing from the research program. Jennings believed that this would parallel the laboratory relationship between the biochemist and the practitioner, as the council was almost exclusively made up of successful practitioners [box 2, folder 21].

The Special Committee on Research Program: The committee was appointed in December 1957. Its mandate was to explore Jennings' proposal and any potential alternatives for organizing the AICPA's standard setting activities. The initial committee amounted to ten members from vastly different backgrounds and experiences: Paul Grady, Leonard Spacek, William Werntz and Weldon Powell came from accounting practice; Dudley E. Browne and Arthur Cannon came from industry; Robert K. Mautz came from academia; Andrew Barr came from government; Carman G. Blough and Marquis G. Eaton were long-time AICPA staff members. (8) The committee solicited information from organizations that ran research programs, held internal discussions, and met for a two-day conference in New York in March.

The first report of the Special Committee on Research Program was issued in April 1958. It had not reached a conclusion on the exact form the research program should take, but a general consensus had emerged about Jennings' proposal being sound, on the current approach having become dated and unsuited for the task, and on the importance of the AICPA's mandate to lead in developing accounting principles and rules. The committee speculated that a first step could be the establishment of basic accounting principles or postulates; a second the establishment of accounting procedures based on these findings; and a third the issuance of bulletins covering more detailed matters. Apart from the exact details of the approach, the committee agreed with Jennings that whatever would be put in place should aim at being more inclusive in the standard setting process:

   ... any new approach should provide for greater staff
   participation in research, more effort to ascertain and
   lead public opinion in uncertain and controversial areas,
   and closer attention to means of obtaining general
   acceptance of pronouncements on accounting matters,
   than there has been in the past [p. 2-3].


While the Special Committee on the Research Program was still deliberating, Jennings arranged to promote its activities at two speaking engagements in May. At the annual meeting of the New York State Society of Certified Public Accountants, Jennings gave the main address to members of his society. Also attending were influential people from local government, academia and industry: among others, George Mooney, Superintendent of the State Banking Department; Robert S. Pace, President of Pace College (Jennings' alma mater) and Francis Cox, Treasurer of The New York Times. At another event, held at the Ohio State University, Jennings gave one of three plenary addresses to an audience of accounting practitioners and academics from 14 different states, the other two addresses being delivered by Robert Mautz and Robert M. Trueblood [box 2, folder 22]. (9)

In terms of substance, Jennings gave an updated iteration of his AICPA presidential address at both the annual meeting and the conference. The main difference between the earlier and new versions of the address was an added section that detailed the recent formation of the Special Committee on Research Program and its membership. Jennings had also expanded upon his thesis that accounting standard setting was in need of a natural laboratory--an institution adjusted to the unique circumstances of accounting but functionally similar to those found, for instance, in architecture, law, and medicine--and that the involvement of more academics was paramount to the establishment of sound accounting principles [box 2, folder 22]. His closing remarks echoed this sentiment:

I have suggested a program which is based upon recognition that the development of accounting principles is a job of pure research and should be dealt with as such. This approach would call for having the research done by professional researchers of proven competency ... [and] should Council approve, a recommendation of the research group would become binding upon members of our institute [box 2, folder 22, p. 11].

The Special Committee on Research Program issued its second and final report in September. The committee had, by then, undertaken additional research and discussion and had formulated a recommendation. The opinions of AICPA members had been solicited, the work done at the Research Department (that had by then become the Technical Services Department) had been reviewed and several additional proposals had been considered. Two more meetings had also been held in May and August.

Having considered all the material available to them, the Special Committee on Research Program reaffirmed its initial stance of it being imperative to the AICPA's interest that it continue to issue accounting standards and that the adoption of something akin to Jennings' initial proposal was the best way to accomplish this. In its report, the detailed structure of a new accounting research division was described, which would operate in three consecutive steps: (1) the development of postulates, (2) the development of principles and (3) the stipulation of rules. The committee believed that the postulates should be few in number and drawn from the economic, political and cultural environment of the modern business. A "broad set of coordinated accounting principles" could then be developed from these postulates. If applied appropriately and without error in logic, one set of specific accounting rules for various situations should then follow from these postulates and principles. The result of this process would be that the number of contradictory accounting treatments and discrepancies existing in contemporary practice would diminish over time as more rules were developed.

Jennings' term as president of the AICPA came to an end in October 1958. The final report of the Special Committee on Research Program had then been out for about a month. The committee had heard Jennings' plea for academic research to be the basis for accounting principles. It appears to be no coincidence that the committee's solution was close to Jennings' initial proposal and resembled the approach favored in academic circles, especially among those accounting researchers who, at the time, were developing accounting theory deductively from first principles [e.g.; see Mattessich, 1964; Chambers, 1966; Ijiri, 1967]. (10) Jennings reflected upon these last developments during his last two speaking engagements as president. (11) At the annual meeting of the Canadian Institute of Chartered Accountants, Jennings shared his aspiration for the committee's proposal:

It has sometimes been easier to recognize problems in research than to deal with them. And it has been easier to recognize shortcomings in our method of doing research than to devise and put into operation a better method. This year, however, a special committee of the [AICPA] studied accounting research and came up with three points of agreement that may have considerable significance in the formulation of accounting principles [box 2, folder 24, p. 5].

At the annual meeting of the AICPA, before passing over the presidency to Louis H. Penney, Jennings concluded:

I entered my term of office with confidence that no other profession could match ours in unity of purpose and in devotion to the furtherance of our proper objectives on a truly broad professional basis and with so little manifestation of self interest. I would like you to know that everything which has occurred in the past year has fully justified my confidence ... I report to you without qualification that you have made progress and I congratulate you on your achievements [box 2, folder 25, p. 9].

Under Penney's leadership, Jennings continued to be active in AICPA matters and to present at state societies. Jennings eventually succeeded Weldon Powell as the second Chairman of the Accounting Principles Board, a position he served in from 1963 to 1964 before passing it on to Clifford V. Heimbucher. Two events stand out from this period. The first was the publication of Jennings' [1962] reflections on the Seventh International Congress of Accountants in Amsterdam. The topic of this conference had been the development of international accounting and auditing standards, and Jennings felt that the best way forward in creating such standards would be to establish a program for research. The second event was the clash between the board and the SEC over the proper accounting method for the investment tax credit. These events led to a crisis regarding the legitimacy of the boards pronouncements and the passing of what became known as the Penney Resolution during the AICPA spring Council meeting in 1964. (12) Jennings addressed these events in a publication in the Journal of Accountancy the same year titled "Opinions of the Accounting Principles Board" [1964]. (13)

CONCLUSION

Jennings was a rare breed of an accountant. He was trained as a practitioner and rose to become a managing partner, but kept a constant watch on the academic field of accounting research. Never one to shy away from innovation, Jennings contributed to the promulgation and legitimization of SAP23 and of the AIA's first internal control statement. Despite some resistance from some of his colleagues in the profession, both of these documents remain important institutional milestones in the intellectual history of the accounting discipline, presenting several ideas that are still in use in contemporary accounting practice.

Jennings' urge to innovate, however, did not always meet with the same degree of success. His initiative at the AICPA would eventually fail and the standard setting process would move to the Financial Accounting Standards Board (FASB) in July 1973 [for more about these events, see Zeff, 2003a, 2003b, 2007]. No standard setting institution has since adopted a similar approach to the AICPA [for a review of standard setting developments in five different countries, see Zeff, 1971]. These events notwithstanding, Jennings' observation about the accounting discipline lacking the natural laboratory found in other practical sciences, such as architecture, law, and medicine, continues to be relevant. Several academics have since made similar observations [e.g., see Chambers, 1980; Sterling, 1988; Mattessich, 1995] and there have been no events to indicate the unfoundedness of these concerns.

On the contrary, standard setting continues to be a contentious issue. In academia, recent research has highlighted the increasingly political nature of accounting standard setting [e.g., Botzem, 2012; Fogarty et al., 1994; Solomons, 1978] and much attention is now focused on examining the standard setting process [e.g., Richardson, 2009; Shaughnessy and Street, 1998; Whittington, 1989], Different streams of accounting research, such as the behavioral [e.g., Maines, 1994], earnings management [e.g., Healy and Wahlen, 1999], and positive accounting literature [e.g., Watts and Zimmerman, 1978], continues to claim relevance for accounting standard setting but there is much debate [for an example of this debate in the value relevance literature, Holthausen and Watts, 2001; Barth et al., 2001]. In practice, accounting standard setting has failed to anticipate, analyze, and respond to major accounting developments such as financial crises [Arnold, 2009], corporate failures [Clarke et al., 2014], and recent fair value measurement debates [Laux and Leuz, 2009].

In light of these events in accounting academia and practice, Jennings' ideas are worth revisiting and the narrative presented here offers a rare glimpse into how matters might have unfolded differently. In Jennings' world of financial accounting standard setting, the FASB would not have replaced the AICPA, which then could have proceeded to establish a natural laboratory based upon the example of other practical disciplines that have proved to be more successful in communicating ideas between research and practice [for an example from the field of architecture, see Milburn and Brown, 2003], In such a world, it might have be possible to empirically evaluate our research streams' various claims to relevance for accounting standard setting and the regulatory response to some of the major developments in accounting practice might have looked very different.

REFERENCES

Primary Sources:

Alvin R. Jennings Papers Collection, Florida Accounting Archive, George A. Smathers Libraries, University of Florida

Secondary Sources:

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Chambers, R.J. (1963), "Why Bother with Postulates?," Journal of Accounting Research, Vol. 1, No. 1: 3-15.

Chambers, R.J. (1966), Accounting, Evaluation and Economic Behavior (Englewood Cliffs, NJ: Prentice-Hall).

Chambers, R.J. (1980), "The Myths and the Science of Accounting," Accounting, Organizations and Society, Vol. 5, No. 1: 167-180. Committee on Auditing Procedure (1939), Statement on Auditing Procedure No. 1: Extensions of Auditing Procedure (New York: American Institute of Accountants).

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Martin E. Persson

Vaughan S. Radcliffe

and

Mitchell Stein

WESTERN UNIVERSITY

(1) Material from the Alvin R. Jennings Papers Collection: box 2, folder 27. All box and folder references come from this collection.

(2) Soon after these events, Jennings' firm merged with the British firm Coopers Brothers and the Canadian firm McDonald, Currie & Co., to become Coopers & Lybrand in 1957. Through another series of mergers, the new firm later became PriceWaterhouseCoopers in 1998.

(3) Walter P. Schuetze [2004] is, in all likelihood, the only other exception.

(4) An online guide to this material can be accessed on the following website: http://www.library.ufl.edu/spec/manuscript/guides/jennings.htm

(5) The change in wording from verification to examination presumably denoted a change in emphasis from the testing of the accuracy or correctness of accounts to the action of judging or testing accounts critically by a standard.

(6) In addition to the constituents of these state societies, senior members attended these annual meetings from the Connecticut, Delaware, District of Columbia, North Carolina, South Carolina and West Virginia societies.

(7) Jennings gave a second, less well-known speech during a luncheon the following day. This speech covered developments in what Jennings referred to as four key areas: personnel, practice, ethics and regulatory legislation.

(8) Eaton passed away suddenly before the committee could convene.

(9) The conference marked the induction of Harry Anson Finney, Arthur Bevins Foye, and Donald Putnam Perry into the Accounting Hall of Fame at Ohio State University

(10) For more on Chambers pursuit of this line of inquiry, see Persson and Napier (2014).

(11) Jennings continued to support the research effort into accounting postulates and principles well into the mid-1960s. There is archival material to indicate that he gave presentations on the subject at an accounting conference at New York University in 1963 and at state society meetings in Colorado and California in 1964 (box 2, file 26, 27, 28).

(12) The Penny Resolution read: "that it is the sense of this Council that reports of members should disclose material departure from Opinions of the Accounting Principles Board and that the president is hereby authorized to appoint a special committee to recommend to Council appropriate methods of implementing the substance of this resolution [Jennings, 1964, p. 29]."

(13) It is difficult to gauge Jennings' involvement in these events from the archival material. There are a few items related to the investment tax credit [box 2, folder 28, 27] but it appears that Jennings did not store any correspondence for this period outside the official matters of the AICPA
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Publication:Accounting Historians Journal
Date:Jun 1, 2015
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