Title Page
 Table of Contents
 List of Tables
 List of Figures
 Evolution of local government financial...
 Current local government accounting...
 Financial reporting practices in...
 Local government organization and...
 Appendix I: Local government financial...
 Appendix II: Accounting princi...
 Appendix III: Study of local government...
 Biographical sketch

Group Title: study of local government financial reporting practices and accounting principles
Title: A study of local government financial reporting practices and accounting principles
Full Citation
Permanent Link: http://ufdc.ufl.edu/UF00097623/00001
 Material Information
Title: A study of local government financial reporting practices and accounting principles
Physical Description: vii, 315 leaves. : ; 28 cm.
Language: English
Creator: Law, Donald Royal, 1930-
Publication Date: 1972
Copyright Date: 1972
Subject: Local finance -- Accounting   ( lcsh )
Accounting thesis Ph. D   ( lcsh )
Dissertations, Academic -- Accounting -- UF   ( lcsh )
Genre: bibliography   ( marcgt )
non-fiction   ( marcgt )
Thesis: Thesis -- University of Florida.
Bibliography: Bibliography: leaves 307-315.
Additional Physical Form: Also available on World Wide Web
General Note: Typescript.
General Note: Vita.
 Record Information
Bibliographic ID: UF00097623
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: alephbibnum - 000577445
oclc - 13980987
notis - ADA5140


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Table of Contents
    Title Page
        Page i
    Table of Contents
        Page ii
    List of Tables
        Page iii
    List of Figures
        Page iv
        Page v
        Page vi
        Page vii
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
    Evolution of local government financial accounting
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
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        Page 32
        Page 33
        Page 34
        Page 35
        Page 36
        Page 37
        Page 38
        Page 39
        Page 40
        Page 41
        Page 42
        Page 43
        Page 44
    Current local government accounting literature
        Page 45
        Page 46
        Page 47
        Page 48
        Page 49
        Page 50
        Page 51
        Page 52
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        Page 87
        Page 88
        Page 89
        Page 90
        Page 91
        Page 92
        Page 93
    Financial reporting practices in local governments
        Page 94
        Page 95
        Page 96
        Page 97
        Page 98
        Page 99
        Page 100
        Page 101
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        Page 146
        Page 147
        Page 148
        Page 149
        Page 150
        Page 151
        Page 152
    Local government organization and financial reporting
        Page 153
        Page 154
        Page 155
        Page 156
        Page 157
        Page 158
        Page 159
        Page 160
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        Page 206
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        Page 212
        Page 213
        Page 214
        Page 215
        Page 216
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        Page 219
        Page 220
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        Page 222
        Page 223
        Page 224
        Page 225
        Page 226
        Page 227
        Page 228
        Page 229
        Page 230
        Page 231
        Page 232
        Page 233
        Page 234
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        Page 239
        Page 240
        Page 241
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        Page 246
        Page 247
        Page 248
        Page 249
        Page 250
        Page 251
        Page 252
    Appendix I: Local government financial statements
        Page 253
        Page 254
        Page 255
        Page 256
        Page 257
        Page 258
        Page 259
        Page 260
        Page 261
        Page 262
        Page 263
        Page 264
        Page 265
        Page 266
    Appendix II: Accounting principles
        Page 267
        Page 268
        Page 269
        Page 270
        Page 271
        Page 272
        Page 273
        Page 274
        Page 275
        Page 276
        Page 277
        Page 278
        Page 279
        Page 280
        Page 281
        Page 282
        Page 283
        Page 284
        Page 285
        Page 286
        Page 287
        Page 288
        Page 289
        Page 290
        Page 291
        Page 292
    Appendix III: Study of local government financial reporting in Georgia
        Page 293
        Page 294
        Page 295
        Page 296
        Page 297
        Page 298
        Page 299
        Page 300
        Page 301
        Page 302
        Page 303
        Page 304
        Page 305
        Page 306
        Page 307
        Page 308
        Page 309
        Page 310
        Page 311
        Page 312
        Page 313
        Page 314
        Page 315
    Biographical sketch
        Page 316
        Page 317
        Page 318
        Page 319
Full Text

iA STUDY OF LOCAL O'.[.:'V:"ErT I;il: I.Q FFP,''F.TIiG ??-"-: I''.E



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Do-'ALD PF'-.J- LA

A DISSERTAT'i'.! [ -C.il'. C.'. .L .. l.2i ,.
OF T'I.E I : .';' Ci i ii .t. -
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LIii .rF T;iBLES


) iT, l Lc..:J Gc.-r nrlrnlt E:..p:rind ur.. . . 2

2. Illi.nits *.ccer. or ,.:crtif 'd f'ul.-li h.c..jiit-
2 :.t C: r. c l ,L-.s-ir"- tl it i S 'th, F c'.1 '. a1 133

nIni.-: '. s'itl Incl jai..q Finar.nc, : i- tatL C,,t
.in V.. r i- nual F.e .orr s . . . . 13

jrc n-ation i C, O t-e-, t)t-- .g C l for Lo:al
C r rnr: ~nt F i c l :Cn rol . . . . .

':uir n :.f .'- -T or .-. -I tiIL.g Prop: :. for
Cr t" laslins an.d .1 . . . 16i

.s. -iple ia .ic.al A .-.curt ei-arirn.2- fh t . . 1 2

..l.-.- r F:r afJ r .-jain 't : tre Ciatl:n Cr i J
: t3 i --. I .:. -- t .' . ri .t.-* . . I '

D. i. Ccurr.t ,,.: rqi-, C.ernr- l ,:.i1 B l.=.-,=e
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LIST ,- I i iF.h_


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t- i :'. l : i'.tj 2 r rl- i I r .IL t I 'j 1: 1 r' "- l i l : 1

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:- rnaiJ f1 a' La:

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.' r t :, i r : .-- ', nt

S I i'.4 n-J c "c- -ti yr rn -: L. .L g ,J i.. r-]t

*.,- -.- lr 'ti .s' I f t 1 C,2.I'iL 1 licL 2 lc l er e,

2 1 I 1C . -i L'.r. ', r. _-.n i ,It, r -r 4 ,_.- '. ., t, lr,,c.-i g -.., rn-

i'-; i -i '.. .- a i' L tl' n 3 i "n i r, J I T'. J .:- r

- _: *:.r.*-: '':,r e '.' arnd r':.-.' .' -:t t_ h -- r. s of th i.

: .. r. o"."n'' l *:r. th I- ti c c 1 .p./.-r.t 'f l.-" ;] crri.-Ai nt

- e-i1 -il i rtr n ar,! -0.1 an' p:l '-'1: bl icK u'iLir,.] ['rti Illn: i1 -.

t i- '-. Ai I, : ri i of r' : CeI r.> -rinali S L l ci li -i ..ith

S-' .-" ica r.ar i r- ??p r t in 'I ? ,ur.tir'i p'- ;: L T't

- = r-',' ti : .'c -.u d, f inJ in; rij't.-I-- j l:],', ran j

'- i C-.Ct o 1.. L 'r .h uiL ,:r.. J r c.- ar:hi ,-ij' l o .f'.,' onal

ot' r '.2 i1 .'n. -ir ri.jrn i nth C rr".rni- ,,co'n,- ..3, ;Lc- 1a._

:.' -:...i C: n'r-.L.:- c, .'- C.:o rn- ,ri- ,t-1' CCr', i'L :i : I t.. .,- .T r c .a

;*.C :o in .s : i ,r, and c..' .*mnr.': i an Inris tut. .:.. C:.rti-

.=1 P-it.A l? 1 .7t,.,urt tan s.

.! criti3al a1 1 'iir.minatri.n 1. mac 5. :tal 1 .:1 q.: errn-

.,ent finJna.- al repor-ting prac--cd i. .e -:iUT inrti .:., i,:lu ia

a detailed r'e.'i-; of Geori, a l10:51 :,"'Lrurirt fLinarcial

rr :.rts anJ d c rimpar s th- .i : 'i st tarit rJs of o'di -.r-t.i._ a

s-* t L thie fl r'jr ipal Financ .* Of ficers A3s,: i t i r anr. r l-ti

.U:.ri :in Irn titute of Cer fti ii u;'1C .: rr-.rt ,rnt- TrnI,

f a-. n-: are ti r ciarrared 'i; E- i r t-ua.ji a r p, 'rf.rm- J in

I-. rcur..] :ut L rs. rt.a.'r': : '- cti .n r l t .,r bL i . .,

an: a' l i x also.: .rn nt..A- on cI posi.- l ; unr :_ue *'r .ar,:.' -

t. c, ra3 - n r.ic C lo al 3. "'r.rrant. janid I hair eff-: r- 2 ,

-._:-..nC .1 r t.ortir the rai :.- ril .-- b-'.esn rir.an, l

=-:- ir.g in ns a.,bl i. ard Fr-'.-t-: :=- L.- r .n [-. l i;. -: ani

use s o 1r lo0: l gqo'errTmi rr iinr[-nial r'E -:r .-

-sa dc on the stut o-f current i F.-5Ir.i pr.:Ir." i: :at

of I r.-ript,. accounting .rn-cipl-s :- a tarn'1. acltd. Tre

principles, if follic'.ed, .' i ul' ro_. : a r-as.r*nabl tffectciv'-

gW'id to *.haIt is now c'.; ncor .erel arc 't-l- "i.G3i" Iract',Ce.

A ma-or c.rclusionr cf th aStud' -*ac tcj t O.,!t'. t:he lrin-

ciplen prcmulqgt.J bh ms3jr p..A.tI.'; .jr]r. ] niat n? an

ch-es dsar;iFP-t..a f g. oJ pr:-t;ce r-iulted in finianri

re:.:_r:. that ,,ere -:,jarily :ffi.:c '_ : in h -ist rmllrn 1_ .3 1l

s a' ipt. 'he- r p ,r-.t i u'ta j :-:r- r ?r.: i:- l iJ n -. f .r--ct.

informal'_:.[ ,:,' in r.-5t :a;i for rar, ..l ic-na,1 plar-r.r.' -id


- rr r::. ; .,:-.e !i rd :tru:tur.e -msPl ,l.j iani tr:h

r. ir ria;n t ic s i c :.i Le f in.ar:ii l r.'p:F rts terijedj tc

i ,nrt i *-z,;ntfuzinqg iz-ure.

Eae.1d -*n the res ir f "Cor this tuijA, a wtr. of "Fprezrip-

ti"' i=rountinq prin.:_ples. o forMulaCtd. Ti-s principles,

if adhered t in lo_'il rj"cr..-nmi t fin r anci r remj rting, coulj

-.*niflricn .:!' iim ro 1 -.c 1 g.-.-.rr, rm nc fin .c..-i a reprtirng.

7i-e Li -..ncial rep5 :r ,: --,ao l a3ist l D go..r r, r i n ic Inits in.

- :-,uri' : i tir a -:.:i.~r. .,..ri L*= i t Lt r i .- pir ture of the

i t7L .t effe 1:L..':n-: rir ff iz. r ,:_' of Or ,.z-tLonal

:. ai. -.11l i t : r. --* t l 'i: "ia "3 :'L : : '.' '. .L n

S i. -. 5-A.: f f i n ,C dp: L t. .m1 ..'. tL nse

:1..- s is d a- i 2 .

C .'- FTE F I

it:If; LiUJ:TIC:l

S rin 'c .'rld aL II d,.L'a= iC d.a r.-:Sti .T: nges ha"'

.:urree in th- Urlt-jd Start-s. TD nan', t a pr:ars a- if r r.di

faC f LT- -C:i--D ha n st r i j ': a3

c.-:t.-it t.-i:t a ba;ic .r irentatjc.rn t., r-innin -..:u .us jr li f:

rt 1. 0~ l ral t: l ,--i ui bjs i je= Ijc :.r i : r3 n. r 3 -

t1-:.. h -l De::- rhc.- =-3r, *. 1 .r ,rE i u C .rl t' it i,

a.. t r.i- -i = :.- ,ra. .;r .ir iti r .' r .:rai aL'* r 3 & ,Jr

loc C= g')" ar'T-lr't :-._ r .

:-r cr inr 1i ut i ii3 i cai *. .:"erru-,erL i' ir.arc
:.*'e: a in. n-:re.=.irg ctri n. . tihe- CE o'-E
s.itrcd tt cop.- ith ne' turia rs ip,[r. i a:'r -i i -.-' rr.-
ments t1',' the.- cor-pl': candir :.r. of m r.d-rn lif 1 .Jla..-
tia ion to ciharn e hri i.eran s; s: l'., l lrnit.-.j, ir j
realu:t.nt that th- future r .- -e.a r the :c:nt rnu-i-d
l bit- t''--cr t 'h.:E in~ tituti-Dnr 1 nL o ,. iVn ira"a

Soci-ctal e..pe tajiarios of loal q.:."*r-c.r-n- n: i per :. .-- *a

bcn miodifi.- si.:irn f,,c-,antly in, :--=nt a'. rsi Trajtlonal !-.-: l

govqecnrrnnt -Cr..'l.is nre ca-En erC.arFJ i jraCt1:i11 to Fe-t

current nee'is. [cEiandi : fr ne- Ser'.l:-e; and funrti: ~ i 5 .--

ljescr rcr and Pcli:' .:rrCTiuir tt.-:- f tih- C7c i tt-- focr Eco-
noiric De'. 1 :.pmn t ide-rniz nt T i:al C-ov rnT nt- t] .. "-r::
CoiraTittee for E -r.-nrmic C-:.'eio:pm nt, 19 6 p .

r. .Tl -- I.-i' Tne J lam. .J ii ci izr en f ,cr inc rre a J Cr-

i e;:, a.jed to -= c '.m e:: Of r:* ier..5 lh1.:h .*:irir'.ntl

b: uzi ur an e1 a t ". l ir ar r-ir n .,pe Co.f Cjo. efment a the

I.:3i le.els far t ns Y- r ptl- r a ent le-e.' s.

Th.- r :te i-.f arc. tri of re c rnuii xpl-n itu res,, Jarin

mpl ".-n n t t tni 1'73 le'.'ei if jgoernr.ent na:; surrp ss most

c.n-i r parrt' of th l- .:.:nr; : le 1 t.el:.,. shn.:.* tC,- incr a

- n. :ncl.-reS e;.Ler SS':3 L ic'-a a'j.ernoenc.. incre i'orld

. r I.

Ik-LL 1

TC UT.-. L -':,L E H 'E.=-i 1 tr..T :. :PE lU L.tIEI

i' r* i i .:' i n, t c r
1:11 tains .f I

I ;' i .,3-l

i . ... ... : 4'

,_. ,.-: r, of tLe -e in's Cer.-jus of C-a ---'friTii tz 196?,
., Tap:Cal udi ie.s 1.. 5: im 3tor1ail. -tati_'tl:s on
:- rrnr.:. Fi' an'iCrs -an_ _Ufp 'nCni t, i. ashiin c r.. L'. C.:
.- f,.' nri ir', t Pr rni, t r, ,:1 ffac- 1 69i 4[. 45-47.

Freaent trer:;j appear t- indicated that an e-er incre.sinq

[art j-i rf -a-ur tc-tl r i- urc.:- ll .'i e allocated to tr.i sac-tor.

: io :al go.'ernmenntna have .3 r .- irn si;ze nd complexity,

tha rea..! for impri i 'el f .ir::na ll acmini station an- effective

-rar.c al -. rtrin.g h:,a al o r .D. ... an editor al in -'.uni-

i: 1 -. i -.c- naLen :

rEtd'e Jo[plLnr. "L.c:] C-'-.a'srnmrnt cco-ur.tinq, It's Your
r.'- .'sSrit.' it;y, Too," J-urnial .: ..: jiunt-rit C:i-.': (August,
1"6 ,",, p. "' .

: n er r I.n ufnl nr:- i o; rai -n i : r .n i
it cr did. The strains o- an i rci n tf in r e--ciT.
ha 1 incre:s-d tihel intitn; *:...r iriLt' 3r,3 LrB 1 hi -
.1*"- orient a relati3 ,n ln i ing iiperaC ."==- E t-.
ti nrIeedj for in-r,. 'jd fi sal in fila rrnrit. a',t
lonj r .z = n i,' E- :* irrLLTCrct:l uInli t- crc j th- lhn'ux r.i
of ill c.n-:6 '1 d p -ri .i ian-i_ a.ndi -cera r.,
ac.-ouriin.; ix t-nn tri t result ir u1 r in t li i tLi
and diJ=.Sint- d c:oilatins -f :izali data irEns=
under 3 i.ell irirint i. n-1 ut rilP rclI.r; ci" J I ai r l-,ar
t-he;y ill pr.i-Jce a r ror finsa-.cial cp:rr.

: '. isr ll 3 .;pl:. ri in ar acer d-r aii in iacer ha-i .errs,

i -oi tiinan:.-ii cinri.istritlri rn an3 -rti:ulail' tn-e fr~n-i

r-. tiniri oif 1:c.li *o'.'Vri -nec h as ; _.ri:u: -r rt ,..,i -:i. As

Or.i C-orcia stae a n ati .r, ih. is- 1 also a CErtifi-J I iull- -

c:un-t it put it

.e- :;iern al ..: a L i in n f ri n: i a t t M -t
p'Ep: r.Ainlc 15 thi; -t,**t n1l.e=.J arj c:i cie
acc'.untin r-f :c.. . gu r rji' -r f a riri, 1
r-.or'tirlg rand he h c-.:.unt ir. r : :.-rj upon ir, -: It
i ba.ci ''ay be jene rally d: rlbt-d a3 i n adJqu 4
r. .,jJh.-,it C'.-.rai an4 ', in fact, thrcui- '',c the
i.ini:ed c'.es.n "

From;a r.:j-1959 tnr.r-.jq 1 71 in: iwrit-r n s tr--C. a5s c0n-

3ultant on financial druiini tr;tlon to local governm-rt rot

the ITnitiLtue of 5'cr- rrri-nt f t-he LUni.tiry cf dor ia.

Dui-in' this time, as a result ofa -r-nal.'- fii,:l] e':nerr--

arnd -esear-n -.evral points occm-r. uite ident. Lrc.:l 9 '-rr.-

eont financial L air lni trarion and parti.uli-'1 financial

P-ditcrilr .Ilnunic :al rf incC, ."Li i- L .ru,3ar 19631
p. 11J.

4Camies P. s-berc", Jjuni d nancial st,'SrCi Lac..irnS in
Georgia," Geo:qia .nl:ii l] Journal .-'1I a':IL'ir., 19t.7l p. 14.

Cr :r 1r; 1 r Ec r.-.a1 pa l E D a J7 pl:.r abi' .a L To

im ,r.-,-'- 3 lIo al go C-.'enL t i ,rr i in i -l rep-ortr in 3a .as-ic st i

mi...- e tc fcl-nulate a ir of ac:oui-tirni pFinr:iple aFFpicaiLle

t: lc.cal o,.,:rnF r.- tin3nFi: .u i r'e .rtir A- the Cfairman of

al n."fcrizan Institute of Certified. Pjulic A.'.counranta commoittcP

.*-n 3.r, az untr f r nr'n-Frofit 'rai nlj.t:-ns scatleo :

Tr:- a5b-ernc. of .approL, iatp. rdtF-l rn prir:-iplel a.id
:tr.'Jirdi. F leading to. in:rr s ir jn--infjs irnj
mr.Iund=rstrn.J rg . t ,riEdJi In mpr'rr.ans, .ar
.ei3'.- ;.pinc jpr.-.pria te rep.-.rt in3 ar.ndar-id in thi
*.:1 ..l *, .rlt cl..i are- . . :-i : -,i 1 .-.f fin3n-
'-i ii r-p-orti' ig t to rc';.:r. firan :i3i d t, fHirl .
Ic i i :- 3if i"-de- t rit t S r Jat l t t- fail, Fre-
-enr d imu-l bet irn .:: -pa-_.- : ir. r :m pr -rcile
:t- -t and rdj of .te; -ti: 'i.

TI- ;u .'p3n f t hit ; tu .' '

i. i .,re-:ent a c- ,ni:_ ( .i- j;re .of the 'i;t.rl: i J-e. r; c 'lennt

':.; i -rCia~.' fj.rrc, E1api'-. the u --lution o.3 lO:cal go.'-'rn-

S :. .Cin:: i ing a-n its prliiciltl

i- to. re '.' .'] .m aritz the itao-.r find-rings o:.f reLe'.'ant

r-Ea it'C orn 3acountin1 zpr ir iclplis far locaIl g ro',ernments;

-i -o prer.aire an 5nalyrsis tr'a sno:;e .nat financial., reporting

-r.ir :tla;t and 3c::.j 1r prl Frinciples are actually fcllo:.:ed by

In: 11 : rt.Ii.r ci e

4': t.. j. -r1 trne s2'ri.u- nhorLComingz and inadJequ'-ieEs of

Ho..'arJ A. i.'tt-e' "f'in r.ciai eportitn. for :o-.profit
uOrJaniza3tions," lornil of .A-:ou.nt.anc'y, C?."I.' 'Decciembr, 1967),
p:,-. 40-41.

n "L r1 t-nr..," firar, :, 1 a ca ni tw c ,an. -j : t in :- Cf

3::.r rncinq prin: irpl a.n

i' tc. forrulate a set crf ri-,:ro ntin] pif n ir ip-li CiiL if

f.-ii:. : 1 d hi,.uld i ni fi an- r. l i p i, ,.',e financial. rep:.-r t -r

in Icca I .'*? -rn mI t .

This studyy praser nt t-' r.i-ltE of et-.lte'sI lti r L r iJi -

res :cr- rn .-in-D'sr s 11 3 Lo d ;-r a.l- f lJ1 i .n"e tI -

.- ori anj re e.arch r.1 locl o''-*y. rLnrrt fir. rc, al cr-[- : ti

i.- r a ir i-,, r.~- rin i ii In the f il .'1 ..' ..ara_ r ar: -ir :h

:- ." : ,aJ :.:C a:r, i,.tr, ll, :' tL l.-:ed n x cih p :r .:a t,-

.=:. ;r3 s1 .;5--Js. in d;ta l .

rT. ChapLe- II a bril' hif stor the -".ilu-i r, in I r.r:. a.nt,

.: r iil. C 3 d i, t i tutli.r -,I.3r.ii ipOa l go. r r.i-,Ein c i;. r nti .

it. -h Ur, it S.i tl 15 is p.-: lde 'ri in anai s c .i C l. c

cn.ir. i- n in the ;.'y tem in s r.r r ._ r e ct c. er"lr n.7mrnta ..d 5-I

i:.-i ti fi s factors c u rin char, E The .3a3l if tche *.-i,pt ir 13

to ar.- de i ans'.'r; to cth qu Cst i.:.ns .r .t. ner re *' ar r:.,' .

cot, there a, an.d tc thro. liinr.t nr, the orrigns ,: f cuij --rrt prc-

tices =ad ccnce[;ts to pr'.'id insi ht for prubierm s.:,luticr,.

ihe focus is primarily/ on histcrLC .d'.'cl..pri enr. Of locs l *j."ern-

mcnt financcil rEp3ortin nd in ar.plicab ie c rjntin Fprin-ple-.

Included al-C. in th: chah ter i ..a sel.c.t'.e :; .'a: ocf th..

develoGpnm":t of i_-rrl o- irri.r.;ar as; f-'nrcticnin3 'r.n:in tir:nr

to provide thl r-a-.r .itrI thr bicaJS d r picture nec'i-i2'a ; co.

pro- ,ld propF-.r perS-r .ec.l'e of ti-e FpcL L-.r;, a -a of financial

reporting and its appic-L-: FL princiFle.

:.- g al If ,ha r.-r Ii: i r-. .':'.1'i a r--ie:. ,f recent

,I-o- l teratJ r de I -l i n g go"errLm-=ni ] irt ar S re ij poi't l r

anjd jccountirq prin.: iplt !:- e rc.': .': IJriir 3t i i c thl pro:i reas

ar. Lul i sh-d re earc !-h c th.-- ir3aj.-.r profa i -onal organ iz tiorns

cc.ncerned .i:th a.c.juntnr Fri-nc ipl- an f inan-:i l rep-r rting,

3a =11 i a r.de .ende r.t I:tuid-l Th an 1l, 1 ,nsofr r 3-

* _-3: iL-.e, t e ntr thl- L.-ac. .gr -irn f injiri met-loj;3c l 31 and

:r_tical r=actic i n f'cr eil .i-Li.r rd.j .Ai th. cr.n. 1ust n C.f

S a l i '. of thf : inr i' ." ju l .. r. a r'evie is r-i= e can-

i: 3 _n rth--dcl i ar.. th-e fli n ini *2E the '.,ariousi

.r c.1 c 5 1 si r.r 1'. s t. pr .n.t a ccr-ir [reh riai'.'-s

- .ii; oi c.- a.iLtul :ia3.ni l r~ e:r t in3 practic l. 3f loc-al

L: ai -rit:. h ar:.1, at pr -. -rnte-. ir. tirc- iiajor earernts.

S fr ,t part c.f tn'-e anal 1- I e fcj=eS o:n l al g.- -rnrnent

: iiiuntir~n n tie St ate i '; :rg ia. To, prr-'.'ie the reader

*i1:. o'.'c:r'. our ccormil-. local go:.errnment structure and

a.; i.'rioui financiAl rfe..p: rin' practice detail-id study of

a mtr-pAlttn area iwas imde. In the study, numerous inter-

.i .s ere held uwith statj and iD:al :- fficialZ and extensive

..:L-,iati.r, :ade of hne iirnar,: al alministration structure.

Tn- findlirn of this ctu;' are u.laiiEarized in thiL- work by major

:-rar-niza.icrnal unit. In addtiorl to th; study' of the metropoli-

t L ion.rt, a t31led c.-intr.atiorn .ar nadc on 3tatc..'ide basis

of '-he financial repF..r.rinl artticsa of Gergia's cities and

c-ur:tie-.. In tM 3 p'ortic-rn aq the study 100 .pub-ishcd financial

reports were subject, to. 3 deta.l-ad 3nal.ya3i and comparison.

The --.-o r, p-rt .t.f thr, a:ial_: -i. h S A ri e t e rir insr.Ii :,f

o'.h- r r r- i.* a, L t ese.rcn ...n th: a-tuil fin n-i a a :c. unrin '-

praztii :: :f -:i. al q v eri.'. :rnnt Il he finJings :f t r. 9ia

S L' d and the studoJUl in r-iher .iraj are then euir.m r:j3 anj

7Dr. traste In the rh rdi pirr. :f r the arialyzi -. a r ' i

made of Lth r-egjl3tiorn oi ioai *j''.eSrrTLment fEirnrzial rea,ortrinq

t; ;tate anJ feral a e.ii-.= L3C5al go"rr.nrr. firsan.e

ai-inisric..r ian rcp:r- inr j 1i Iubtcjert rec. -Lr: i iin **f

pr,:iE cr i ti C ar t j r-.3laor This driie-ri acurj, irE --h-

- .i r ih th-e nature -nr, :r Tr SU .' re.9' ati '.ri .

The g'l r.f '* h3 ter 7" i5 : r:..ir.J J L t- r-aJe 's r -r

3 -:r:'. on t-.n: probl: mn arm 3 b; a i' .-'ru ci; o 'i thi-r- :r

Sincl'j.i: in pre r --din .:' a rs. 7i fi rst 3.CS- r i. :f ".h,-

Z:--r t I th p.ss ibl I ni rij r : :. r. :r.rn 1 *n- :h: r -. r-

is zti of local 9g ',rrinernts and the r ffe.:r. 3 -. : .. n r n 3raticnfl

r-F'porzirng and financial al iiini-tration. The ici.n s t3:cti:n

presents an anal:~"s or the ma j)ur .ar l3i c bitc''.er tri sey rtem

usei t' report finanri.al data i the pri'. ate S:ctol j]J th

;'stei Luse in the puLt. lit sector. Th thirj scti..n pres-r.nt

a re'.'ie- ind analysis of the u-erc and ua9s of loc.il go.ernmernt

financial reports. Thr chapter concl de Ith :l'!a ae .tud..'

which illustrates :he rol= arnd nor tiar'.tn of financial r -p.rtirL

and ac.cojrtirn. r rrin:iple inr lo7 l g '.'q r-,j-. r.L.

iCha .i_ "I h3a L, t 'O raj-r g als. -. sum.r ; r i L ..d of t n

rmaiJr finuiLnr. and c.:.n;:1; Ir.n ocf tn pr-e'.'1i: i .cranpter '. in

aditirin irw a lt-rnati. e s of ac :o:nting r i- 1ini1lec ifc

1lo-'.1 r'.'.-zrr.n-Ir ar prc .: tc i rt fir s: i pr i,.ril.a .

d' c.:pt-ipr an fLr c*:- ,rrati' pjurp.cE patcrn3 ".fl-er

tilij : ci- ntairn .. in A. cc J- urc.nin F..s': r,- E U '.V [1,.0. ?, : ..ic.h are

r '-ic '.led in Chap-.r Iii. The c .-ni s~tr j ccI..unt-in

prirncipis pre;.ented i;. prec rip:ti.'e c an a Fp nt t .rd _s.ctcm

Irpr '.'em rin .

ths sLrujy ij t .cu-e on and U.yd L7, tne fi.n3.nial

: :..r-: r.'-j irno pplicabi-: acc:untr, tin pr irc. pl. ipi lo.:al

o'.'-. nrrr-n t c~, :r I i : r r E t il:. a5 temT ct AL r s si rbe rnad t rclact

S-. re~:srcl fninjir', r rrc';nn-indjat on to eitherr state ir

Ei -:-.i ,o '*eru-nrin :r nor ..Lr. it nr .-m~iqc":'nmeinrLta .,r a; I iaLions .

T', : tuj. i a 1 ac F:'3"' t t e -.rrn.l finanri Bl reourtF

:i a ar-a iurn in ur r.:cir.lc apol..-:itolc tc. ther f inrra :' al

t: ? : .mac up I to.'S i-:.:EiL T" tori- ac,-: Jnrirn

'it-m .-S ,cr. cona ,icr.e .o*- l;' t., the -xtenL Lt.it tihe external

-ajral riporting .st,- is n interrel:ted -eg.anie of thls

--.ocal -itn.

Tn- fLnlngq an-i rcco.mmnrn.at n relating t:. this study

3a ifrinre. may ,'ell ha'.'e jppliation tD .:thcr than local govern-

ment orgar.iz.iti.n-. and to other 3seanents of the total account-

irng-nf.srnat i.n sri=,temU, uc.h as internal m.anjgi-ment reporting.

Th1i rn e'.'r, is nct inclu.0. 1 in t!i '.g.p ,f this ic3l;.

C i;..-TEF II

ECOLUTI rj ''E LLjC.kL GC,'.'tEPlrI:Ei.T fIi..AIICIAL ACC', !.ilTi .i

In tna ct.hptrr a .ciect.: chrIrn.: licalcs narrat L,'.- of

rrn e" lI.t .*nr of l-o l o'"' rn.ri.rrt flin-, iali report inr ar.J

_c-rc. iLir.] pir.Cl i 1= i Fii rsente.i FrughFt tI trr: lIns

:--..n ;r se:.a:~ri n lac.rn are 5aelc: i critcl.: a fa:t.rs i:.r 3 lr i

S-r.l-i-ncel a 3':nTir.Irn .Je' ela i ri Ii r.l'st c : -.-i.i :r

. _-r fia ,to: 5 affe.srl je..l.:.Frnt a; ti-i. 1 ,ni ji,.'ji -

:- l ,-.&al J',rs :-erist..cs ai;d tle n c r. ,;tn rilIe .'.,r l.:,:al

: rnment as '= 11 33 suin in-titiu.lonal f -r ;s as Lne uri-

. -- ', -,-=,*' ,> Jjz r,2fo r o*i. _'.JpF sn i th. j, ^ at P1 r ,,.,

" i--er 'a- ociatr. n. Taethcr i it thi. aalsis pr.-es nte-

1.- l:ter ch:spt-r rth. gja l .-j this chapts r is r.:.. h..' the

o',ci: n ,:f Exi tii.3, prac-tli:e anr t: ije n if.' fia tc.rs thr.t

~inter- ctd ir the clhan.e proce:.- .

'j-t cric an l-.cal g-,'. rnun.zr.' fcaurni atclr, rcich bajc 1

;th'ougn the years to p[r.cclo'rnal Enrglin origins. Il .ry w f

our present-Jay local :i..:rnrmnt ific' .arij inititutionr

.a-1 a o iorn hi I..:.r. irn Ernl l h 1..:c l *c .:rr'inft r r n trey n.'.rc

tla.1. :--.lnte:-l ai~ t irnta.t to the colonies. The a llteri r

t e'; mi e, ne.. a cjunt Fp a e cffic: r arni .: irt ,f .-ficial

-:a original i; tni -hi-f >'ectivae f th, Fre-iCormfan -:hir

1 I1-

:'-.L. TIn. Fr li, h iC-..: .: .',rrNmi nr. =-: m had 'J ".:' int

L'" "ir- t:rou h r an ti.:n; i ips I i' bf r i :r -th first

::i:r, 1 tt 3 in t he ne.. o rld.

Ir the oarly decade; of :.Jur :I-uniry'. local -.'.-erru enc

anj t adrininirs rat.rn in ru imentary and the :ciri-:ens iere

,:r.crr.e primarily with .tin3 enoricJln fcci to ia and a

rcrf ce.'er th-ir he s. lt,: .L1n iarly lc.al g.:' erruaTents had

i j : il:-l l g i-' 1 a c .";- 3 .J :\ :c u t iv' f ,rnc t i ,n s th ar ,?

-r. all, s1 n si .arat'i:.n orf F rrs Loc-a l :'.'err.mernt

- ia t "e r -- .'L- -.t'ere uI l L lliTri .ted anr *: nr is -. -i .r -

S- 1 c5 c r.J nan':-l f r ma Lntel nare- of rrier nd pFre -.nti rn

S:r. ari: e= E ,:re he r, reti nt.. ce* t ,ury mcan-' rci e .:ere

S- '. r.u_ ': itt t, t L ri',ht ,:- f t a;.:-t. :,r, Ih.. : :i minis-

:r -' .'2 po -r- l -ai a3- r,Tment dealt alro-i t ;::- u-= i .,'l/

-t ,t o- f C ;a,.:1ai l coiurr itr.' iterest.

Be .: e r : t. R.evol tionar i E ar .d th.:- ('.'.'l Nr, local

;..-mrent wa: char a:tr i:a by5 cl.e forces of Jenmocr a3-,

:e., rilizatirn, anri tcrrltr'rla e::pa3nson. .-.fter the United

rrtes Be:a.e indeper.dent, .-tate lcgila- Jrcs .,-rc quick to

Etaclilih t:eir :upre ima:, in local go-ernncnt affairs.

Co'irt-.ers' -2re rantej directlY' by state leg. latures.

:.r aon i i.:al ;o**r-nrn~nt ac. Harold S. Alderfer, knerican Local Govern-
I ~T nr. d ;.drini tr.-iro.n :1 Yi'crk: -lacmillan Co pan,, 1956),
I ,. -.

':r '. srITiar', hi tor,' of c-lnial local jo'.'errnments scet
- rn r. ra'.;ie, [lan1iiipal .. Iinlstrati j-i .'' "*or .rk: Hacmillan
Co -1 n ;, 1901 ) P p. 1-100.

Suff-'ra:e r 'tr-i C t n-: bj; d .rn sr'i .-r. Frrf,' (urir ? thi: p- cri:d,

rel3t n3 gto. il gcnic r ial 1 .rc ta ol ish and tih c..c:rpt

of *:c err''imenr t ./ ELen crorurrrn mai '3 sta-bi abi ihe 3. In nan;

cas 3-s -'her lcal g:.-'1 tLrn. ,cr, a L c tcn rul.ad b-' ci -:.

corp'orat iln rn w iic n', p ?.ular election-- vcre held, nI;-'

frz Jrt j leir '-toir all ffrlcial .are ccIrJnlidere. n-ce:A r

o l-ep ;.E.er,-mnt fri:m bLec irir t. r rrnnic. .

'rom tn:r, *n t ,f h t-h Cr.'ii '.1j uintii tl-,e turn :f -.

c-rr.r,', th- cruntry ":, nt r thr; 'j .jr a period *f uin; r ,er J;nt.

g' -:n. :.t tr-- tm.- of th 'e t i -oei'Jtl n there i- i 1 t- n-. ri

t'.*-'t -f:iJr -nc* 'rpoJ-ate.j r iinJ ciIpat1Lt1i a'nd tr, inruts: rC,.-.I

P--: riladelphi itn a -:pulatrin *o f c.il;' 42,0j00. C'i cErL

-r :i. cf the pop'I atix .n at thai tr lc I 'd in n ,rur i areas.

L; asaL E= ?0o tl.rre .. -L buL thia C n citi- In ti i Llrnte

3:: -' '4ith a rDpFulatLion of c. cr ,0'J00. Bj the year 190i' ,

iE c'. '. r, t:l,- erE o '-r 415 citi- ..'itt, a p.'[li ti n C f : .'r

8,0j. During the la-t decade of the ninete-.ntlh cnrtur. tLhe

nation's cities: gr-' Li mora cli tnr trirt, percent. Tr. 160

largest cities by 1900 corntained o,.'-r a quarter of tri

country' s p.apul at i.on .

This half-century follow: .'g the Cl.1-l iar 13 often termed

the dark ages orf ,erican nurniclipal listor '.

Tns forcs- r'leaed bL the democratic ',.''-e n the
first half of the cEnr ur', Uler.dinr, 'ith the

3p'rarnk J. G cdr.o:', municipal Zo.-ernm .t il.v York:
Century Comniian-y, 1909l p. 4.

:ra rin .' tL- f 0 citles l inuir.mZtr', L-ia '.'a.es
,.f jnel irni :i r.r- snd tri mt r t._ria lism or L riJu. r
a- a c i- c ,, mna r. .rn unrestrained fury u,,on
.'-er can 1 3 51 r' En-,- r t.

Touring crhis p[irld s-tae: Ic islatur-s t-cndeJ tr control the

.ior f r..fitbil 3 *aL-.e .f 1-.:3l go rnrn-nt such 3s utility

frai.crisies and [t r-:n,. r p- .-.ecial local 3 o. ernmient le-jislati-n

'a S..- coV,-T rn aft.-r- 190 tri.at in 3sOT: st3tes It took J il~ a

ijo.rit/ of te_ le- tij.a ture time. The ":.e: mia'or" plarn 'as

' I:c.minait i Jtri o"' r.-in-nt dur nr the last half .:f the

S t r It .1- r r rrist ci udIjE a l rr c..:,unci i hich

:- t.-d r.hr 1 -: l ati'' an.t sin i ristra t 'L functions, a

allow '. ith ; -.n" E lc. r. ff :'i ts, 3 rd 3 mayor ,1lth 'eak

S-1;'l .t rat !'i, p- F tt i...c>i Loss es ftorm-. [political

- i in.s t.. t., t r. : -.: a'"anta.g of poi itical r-arti ii'. ip ne.,

-.-,i rant n.J a :..11ils ,;t.i yrouj corrj[F.tion a ,nd

-- : e .: ras. g ncs to loc l ,s: rnrr.-nt.

Lt'r. the e.-: s.-ts.res and the debo of locai g:oerrnmrnts

.o E '-ih rFl, Lrin -n his p riod. Ist '!c., YT.--rk C c, f.t.r

-::.---j]:O c-::. mr irj ur- rose from $3 million in 1350 to 593

,i-llioin in 1899. Tj ca.Jouflage e'-:pnd'tures public debt was

: '; rtllcl .pilc]d u EuCirin- the ninr,-;e-ar period from 1866-

1 riftesen crf -.. prir ipal ci-.ti; ha a .,ebt increase of

l.-.ld;:fer, .'..i:rican Lca: I Coverriment, p. 72.

Frn.3- GriffIth, ihe .'iodcr, Dee.-lo m rnt f City Go'crn-
.-ent (College ParL ;a.ylad: !.-' Grat Putliiin.n companyy 1969),
K i4.


As *' t i-oLr fac t- :f _: i : q"'errir en tnhe pr -ced-?'r:

for rec.; rdai q an rep rti-, i.'ci i gi.'. rn ir.-t r nirir.: i .i l

* ere Crlglinally base ::,.n :: istinr.j r..iiish prs:ztice Ir.- T .

earl'. practic--sE t..l'.'ed through the ,ja; .as the r -ult .:f

1.'ar lous. fiatcrT. 'hrcugr tnh nineteenthl- cent r, r; r :o ijs. rn-

;:.-.pin. ar.d rrpc.rting.

The rneth-ids of .Ke pir; account :-r the diJff.renc
cit .- h,'. r.- extrei-e *.f .'.ari et* ar.d tl- t-,tal
i- k. f ar-n their. lisL'e i t!al .~ ter . n nr,-c
:3a e- ine renrorts *.f iijnir.:l pal ic-.ptr l .1 iri a- e A i
iu-h a confused conditin that eel-n i.e ali
clI aif Ad iith tr, :- l 1 -- r.lition f i ns it
dif i-ul: I L it no-.; ipJ icle t.:. undij r tan1 th.r.
n- ncil1 s1 Je ti r.. '

Ihne z.:. crk Sr.tate Leq sl ture in 13'.1 mai an :-.:trni j

t-- iis ti. _rnto tie coridi, .f tri- firnjran e *jf t.h 3 : 2'

-.-.irt airqcst citi.:7 ihc in'.'-e tigating c rrittee f.ur.. Lhat

tcst; itlis sold not ansIer c'"n tne sii ilest qusati-n s ii-rut

their financial c nditi.-r i. ine .oiTimliTiitt de-ic red, "The s's-

tern of acc -jnting in the -='.':ral cit c5s is mr r-: ur int. lli. ibl:

and hj- .ric e.en than tcile la', undrir *.nich the- cities thnem-sel'.e

are ad.min istered."

The acc :ounti ng s- stcem in n rlt l:cal g *.'- rnr nm ts up tj t e

turn of th: ce-ntur' '.33 a ru.:rli-Ecn3ar sinTirle entr.' 5 Ste-im

cer.tered arc-unj I c3ah b.sok.

Fa-ils e, !il, icif l A ir.j is tr:i t l-: p. ]:2.

7C. L.. fook c, "L.ni forin-iit in ;!nriicipal Fir, anc 'LJ _-i7 al
Affairs, II 189 ) prp. 15- '06i.

.-. f ri.m f partial .:.I in .:.mpi. .:. .-irt 'as
r C..r -C tC.* -J 1 'ilZ rtir: a st arenrnt EIr-
tairlr.3 r., pr-, .rtie a n lialbil II .. .
L .'i: ,'jLn, . i t -, J Ltl in '."o iJ ii
n 3i l, all -our .-ru i criC :i C c iti- This ,i i'h3 3
m.a; b tirir,.d an r ncrc.,Tol.te meith-.d of single-
entry accouncz, i.e. ca .s'scL- i. f entrie in
3cc,;,urint .s ...-ing 1 iri inc.:rrl. ct: -w' t' h-'
siigl. relatiorn--c, ffii c al fid-lity t .r truSta c-

-It rh.:. i h mr.rc: srhi t icited proceJ,'res an I r.-chr niquej for

Snari"al r icr.i'J respiring rc a3..'a 1 ble the.-:' Ire n:-tL In

-ri-r:rl us.:. Cl ".-i1an attr butd r I I. r. t'he e* eloprwrt of

--:u- ii-. c. tf i pr ji lina n :e- cf bur a,]raria ecorn1my Jurlrg

r i :' .- l f ur jricI : i tE nceri .

H -rc :: uti t in] i.ieald remain :d unrc" 1 eji lon:
after th2-y :,.ad sarirer t". 1 I a3-i. -D sci-enr. ific
c l:if i-a.ici asbrc.ad. Ilt-r s:als fnan:ial rep rts
: rat:ir-,J in i pri :- rionfjior lDor, a ftEr
-ccurits a..: hal L.e -1 i 11 ta3u -!d a. a pro-
fcssic.r in ELniarni anri 3'otl: This -'a laIt iel_
,iu= t.:. t.i- nl ss of cur nate .nai JI eloom:nt . .
u :nil the miJOlle of t!.e Iinet:,:nrit c:--] t 'jry .-i ricC
',s3E pr inlarily an agricult'lral corcmunity, a3rd tne
far.mr nreeJd nro acc.:on'. oher than a sirmpl~ state-
:ri.nt r.f rieceipts anri 'ay. t *t .

Ue'.*eicF.ln; nt of acc.-or.lin! inr th-. public e-:ctor for many

'-nri -..as pa.:] by. developmer-nt in the pri'.'ate sector. The

.Je'.relpmrc.t of cco.ijr,itin-9 in the pri .'.at scct.:r in turn

r -ecrid ,j tOc dman ls plac-d upon it by th- en'rrioruventr.

rredr;!. A.. ie :eiand, DChpter. o'- municipall Administra-
t'.r d ir j ccc'ntLin.I -lie.' .orr:: .~lngihans, Green and Co., 1909),
p. 1J8. I

9ILid. p. 113. ,,j : .11
*s' 1 I

itiLa turr, *, Li-tr c-rtur '; s r'.,3 3a a sqnif i c.- nt linI.

of deiarc t icrn i : 1:-c a ,: rraien rrt :f r fFIrr.r tc. thi.

tin lo al q:g'.'rn.nelfrnt '.:'-r r=lati'.'-ly unLvI';-1 pe-d. fi. :l

re',uirErents .'ere -mall, and rte s,'i:rcc~ of r.,"cnjue fE:. by

toJ3a '3 s tlan.ard The prct -:, of fi-.c ajinmlris-trar.i.r, .3aZ

asmcle and ar,; underl;in9 thlccri-c i .ar qeri er !, rgarir-a

as irccns r.quI tal. In t ie L-icLnning of thre ti ; nci cr, c e : r r ;

thers -i a *.eri a'le .'.'.' :t re .l 31:.in a ai;rst tin pr. r i'lii r

local q o'.'ernrn-,en. s'ten part :ul ,rl in -thEi ia r .:icines.

? finned intc fi;nre t "'i, -kr i.er .i., '.' tcit r i ,

r_ -'.u.ar nrajaz ine i3 r--U. c r ,.-. i c C C rr p. n t., r.i. --

sr_.. e j:.. t -..3 ,-n-n cr1tl: hrlze.i irt, T he r n r, i pa

c 'nriTicq' hich -re:.'ails i n,.edl; 31, e... :-n l'.e anr.J qe.-.r it

c,:- ..i-n;. . it ha- Caus z i cit., .adr fir. 3 tr r.-,Lr, t.-. re

e.-n ra3ll' re-a .rded a: dis:teii tcd t:. t- he .ttericar, pc::l, ,.

AI itougoh earlier rcffrmer had turned thei r atet e.icr. r.

isclat'd lo:al qo 'errneir. t pr tl,. r.- L-nciuding finar..rial

sr:- ?enc, the inaldequiat, condil ictns of lc:aL qg '.-ernmert ..'er-

no-: attached in any pr. raztiai a.anner f ntil th- turn -.rf the

cent-j, The re f.-rm mo'.'mernt de' eloed initi lly trnr.Jug-]h

local organize r'lionr called b'y rt.i.- tilcs a research bur.aur,

voter -laues, anJd a::.''ycr a--ci tinns during t-e fire

twK Jea'cad. of trh t,' ntleth century', these ref-rim grwu ijt

iODor arn Eaton, Thi *-..ernrri t :-, 1,c u icipal it ie i New
Yorz. laci-lrllar ComFpnry, 3 4i p. .

.ic,-on reJ nuimc Ltr cf :l..pn:ni:crin-.ri ,a- pIr L d. u ch-a:.c. i -' n

r.. o 1![r '. l..Cal qc.g'. r.- i.ner-t -ij a di-rec t. t e .imr ry rtl cnr

arjJ -ie h3r- t ballot.

ju t of thi, re&frccr ir.'cL- :-.t Cans- the first serius

dttCe-ptI in this 0-r,'itry to xiAimine ari.i impro'.ve local -go'. rn-

F:rnt 3a.'c'u tir, I7dthl:-u h th: 1 c' i r riw nr r tr re f rr,

.r Zi-r. 2i atit ns E.r *ir ,'34 ir. r.an' a': t.'.itie the ref.trr, of Ic-al

:.:. t nr nt '/-ftci ,f f I ar -1 i l j.id Ir.i trri ,ron .. r -cLpie&d mu. l

d. tI' : tr ,,. "Finar cil a3 ir ini tratl.r, has claimed m iore

. nt-rt i. -'ir. Da-' rtier fi t. Th- 7 a, i] c a r c.f man;

- -- L i.l be n t:- ;Lr.. f.' i i p r '. o.d .-uI ag n3, .-OZ unt ting,

ihe L atl..t- l jijn l.:i. 1 ...j ,i'j. i-a- formt d n i .'-: :.

r::r i-. 1:: i r efor.i. r. u :. ris or r jniat, l -c rie trh

-fr.'' and reipec ted le ier an.1 -tbol of 'the refoL n mo.'e-

-.-. Tic L.-ea e '.i a f rrm;i.- h axt eer, affi lati e organi-

; l.r1 baut itirr one yea: iasd 1 I, a 1: ral tme r r organiza-

T'-= Ijatir..r i l Iurnicip League in 1293, after se .eral

,ye.ar. of scud., published a nc.el Itate c.-nstitutioiial amend-

.-enr fo.-r local e o'.erninri i anjij a gcncral rj-.nicipjl corporation

actc. .-j1 nt-egra f.carure of I-oth docjc ner t ..'a the

'p.::-.a -, itil1 luni -:ipai l-:e arch Bureatiu Illasi i nrjg on:
.*-rir : Ca -ncil o Fbiltc 'r-fairs, 1944 p. 41.
raal'. il. ftew.art, A Hail Cer.tur'.' of :iuo icipal .oforra,
..-'--ley, Californio : rn'i.-ersit; of Callfcornia Prees, 1950).


r- 4iu re&arnt ti-'t firincijal re p.rtL 1icujl_. b_ '_tl i h 1 J tL:' all

citi-- c.n a ;'~rl. bas5i orn *:.rjenrditjurs, re'.-snucr s, ar*- ia:t. j

Under th. .lJirec tion :.f Fr.:fTI jr P.C.c :.;f ith. '.-ni .'-r it

of Pennr, .'-= ania, saJppc.rtiin. modirc finan:1al sta s : r nt- \% r-.

pr-cared and pult-li n.s b; tir L agu Apcpend i: I:. ;.=rh... r.n-i

Su-u-'rir statement -c-f .Cci Fts ainj E.:. reniditure- th t: '.:

rec:-LT-ndE.s. In mor= uct.iled suppl[lrrencar: -arcren .:,

:p. r.ditj re re t: b; ci: ssi-fri .j fc.ii.

urr-nt r.:pen;- s Ind urai.t-nce:

1. .A r l.'-3

3. r th- r E::
II. Cons' cr ucti cn

III. ..;traor-in! ry e/penditr.r = .:th.-r than c.n:,s ru- i,:r..

_ tl--: -ri-;rl-i3ii s 's3E pl--d :n tn b l anL e sheiet ir, t icr ;

*ritin.:. -.E lll jtrat.d Ir .'.pp-rn 1 : I?2, n 'ineral .-tatr-m nt

;: A.ct- and Lirbliltle '. as re -:.mmndvd.

The Leaygu- pushed hei- '.' for unifo:.r-mity in fin ncnal

reporting between ccrmparabit urit-. Iij'1i.ur,.-.Eo 3itclit Lei

published on thr importan--r of uniformity in rffecti':ve u3;se f

financial statcLtentf.

T.-e desirabilit cf pr.Ecribinn' unifr.rmiti t' n r i :t
reports IE i s c "c .cus a- t r._ --qiiLe itrJ. brief crn-
sideration. it 1: qui't lil1..el tnri t:iis pro'.'ii on

13L. S. 'c-iw "Fublic Acco.-.untlng UrL:, r tn r p,:-e
Municipal Programs," Procedin;-3 f the '?ti:njl iunicip.ial
Leagu 19? IP'niladilrphia: -t ional municipall LOaauv, 1li9?I
pE. 10 4-'.

Si r1 r'.- to tlh f ir t te t': irJ a ell
.:rr, n:i .: .' ~tem .f :cntral .aJ, lr i trat r .' ccri o trolr .

i -l L i Li rte1.:rt :-: not :r.a h. ,Ir fi inal
r:tuljJ f r. 1: i pa 1 r nlr- f rl- mrus't LC c :l :.mI 'r atl'.*e
S e FiA-r h; -"' ra ny fn ran.i al stater-'s,-n
arrans-j. 'it h u .* I d nri c.' f p lan tha. tr.,.
car, L- : .inpar- .J.

Eff.- tl"- Intertunil. c:i.pupr l ton .f ic.-I ?** rr' e LTrirr.t

f inri.:il taicemon:: Itii real3:rn; protblcr ara csdy.

:; .I-. 5 arn r eff- t 3.- s ';:.r, to r. '-e :.--o arisen po:; ble hBa

C':"- .3 t: riuj.:n mr're ii-f.icJlJt t.iai otr ini alI, ati c:t ip te.a.

'. t ;:r;ui a 1I.::21 i. c"erT-Pirt of ficial. to ado. t a uni-

. aI:.C,'..t'i. h s' Irt.'-.eA lspeciall, *i .tifficuit.

It a i f; rd -: :1, .f icial a att.fi.-d witri ri
e i.t.er it [..C, cs 5 -anin t,- o*, ersE, .r
as inc li ,ible: c.nr L' L." ir,-elf: anJ that II- liokcd
u -'. ar'. in-iq'ir f :-r :.u i .l] a '.'. I, f'r-igr. t-,
z : iT rranr, or zi .orr., '

: ;.L .:e scat-erent ..a. .'ritti. In 19 out it could just as

,il .-a'.'a be n ','e tI rd .'.

T.n reformer- aloS strea-ed importance of submitting tlie

ar.'tuiI fi.r,3s:il re-prt C3 t3 a state 'ffi t ial Thy loot:ed

p-.rP t.1 ai a m-onit-rin.g de i te that .Do'ld Insiur tllat local

fin-.n.:ai rezortc ..ould meet ;tate '.' l st.an jad-

14IL. :. 0 i9.

Frr--eri,: icl" S uqqigeriar-c.n for the StL.y of municipal
F lin:ca," :n-- irl- y J:.ur Ina cf E .*ini:s, II TAuly, 189bl r p.

soiij l a -rl.a rl i4, T:he Imi,.ortancrC- of i.i. fctrmity tor Pur-
o. '-; of 2'.::- -_ riaon," Pr!.:'cc wings ro the iNational municipal
L-:u -l'119, hilde-,il,'uza* 'aLional o In icipal Leaque, 1901),
I-. 3

ir. 1 0'l r.h- :l .,ri l irt~ ln i :i a I La u.-- 3p: r, r.,--j a

C -, 7:r.?:,e :rt Li1forr f lun Irrcir[-l .::'cjntin. iand S at l tic .-

-: t:;'l'.'l i -L-rs : f :.rm tte rarijirin trrm an

-.s'ciate Ejditc-r of Ern]inr e ri I;.',; t, IJ ',Tiing' titrS

E:. mrn: r of ..ccj.,: r.rs ..re iir'-tru.i te] t. pfr-pare and reic.r.

r:- th= League "suc', '?etn .j r *i'3'.tmi focr municii.l

a::oaU.nt- an th *:.:.1i :tin *f r, ljun1i ip' j tti ti.cs a; it Ema'

.:.J : e rF,-,- .je-.raF l i.'"' Th-, C.riil t e Fpr -ai-c t h-,ir

rFp rc a y'.~I later sif cr Icidin g a nu-.. r r i i..inj . T!-

:-- ttee not-e in th-lir report Lhae.

i.'e ; '.e J i'-ptj J tn e F t :.f 1 .f -- : ntral
,a.d-.orit c,.atg.ed.j, fir rti. r. ti-, Jut, 'f
creifnn strie:tl, unitarf rOta FR E L a-f s a f
r-i.-- r ..e- ft-rr F biarkl.-, Fr m a"- ci. ti..3
*.iclin o tr ]uri jilctl: r, i .-re:on t. i
U- ir, u;l r rF.rts a t Che .1. a f:.r :ur ,. *,-
r-,Cor to tne L-q latur- .

i t CoLemitt.e nottd' tat it: pJrps'ae *aj ti: j.L.C i

.a a:::a-le ,einatme for Sjurnmarti:ng thre L c.-cLrt f1r riijei

c -.i .rller' raep.ort' andr not to ciela .rate a ::rl:,:-eeping

s'.st.er T e iTc icl rcport recci, -[TeLnjd -J th; -.-iuT litte. :'re

'a' .a ilar to thol-,,i rp,.-d i; t c.e several y'-ars earlier.

? r.'.is5 t -ier r'oa-t inter-c ttir.c f,:atur- thu CEUTuTM r' E r :.'i'n

1 '
!,iurlciIc al c a..; : titin r Prd',. Tdi Z, -D .e- :.'I aiati rnai [Ilni: l
Lc i. 1e 1901, |F -.1l la ;!a; 1 ar a tj ",mr, a Ic Ler,,u!, I F'.', L,,

l dw-ird Ilart ell, "F.jCi:ort .>L L ih Ci: mi ttee n i, nlf,, rrF,
.un:ciral Accu:nt a -,r'nd : -ILstl -cs, r "o-'eaeJ ing Df tiZ.C
N.-tiorali 'Mnicipai League L'902 I 5 hlil adlIf.p-i : [arional
mt-u:;'ci:a Leae ue, 130 ; -'1:

ir ..;.;- ',.1. I : e Fr i.-.ar.' u-i,,p .:- s c f t.rie rep.:. t '-as sr,

pr 'diLnj i r.-rc ic L il.ld .rc 3 1c.J r'-, i c. f r r rnue 3r,. e>:!.eni -

t:CL -s T : .rrrii ,Itr.-cVe ha-1 J li -- e. n C, h-AL -? L'.:' I altl .3 r-. ,r Iri mI

to UrLin.9 inifrcm i cri mun ipial s LatI.Lti :. The Corrjnittee

found rJ&e field ..f rLuii cipal I tiitLi :; : c.:pl ICa ed Lt at

the_ demc-. lt ir..r: ct-i.:ual1. to naL'. r-corume jniaJ iLo

riemerr ..f t!e :i.Ationai ,lujn.: -iiai Lieague al cttIL pro-

-.t.: reform i;, ic0:51 o-.'rr,-fr arC-cju i r .. ThiC-y ..rcte an"d

.-' i .Il. nr the 'Aut. :- t .t.r a.. T Aec.Lred .IjopLlIn of

. .T-el firnarcial E:hej'jle- rop:,-.J L.' rhe L-agoe ir, e-ighl

: i inrcluiinr tI sccn, Chi : igo n' .Ii lr, ,:e. 'i' al.c.

-c .- iede ir. -= Lt r ii l i ri 1 art- ref'c.f m i i a 3 ru"bter of state-S.

S .'.--:. f.r p.:'umirple. prIei .an act reJui-ring tnir.Ai class;

.- ; toi ri c..I arnr.u.ll t' tI- .-crEt r, jf state upon uril-

f i-.L'- .3 Lt~s: J.n th mi: d- r rnn3cI-i --titiom r.ts Fprepared

- .? tia l..a1 niciFal L a 'je.

rio:r t.- che; turn of r.n; crntirry, tcre Federal go0'. c-rinent

.:-..J ideitler coll:ct.-d nsr rcportcd firn.r.ial data on local

g. r ernriirnti on rn : .ppreci.aibll c ial-. In ti;-, 1380 census, a

onci-p3irti" -x*i:icit cshi.. in's assezc;cd '-;luc, true vaiue and

ad "aloren, ta .es ,n r-al proFertL for miiar Iccal goqrrnnent

, I.t- I i -- ol l i-~ sd. T-- Cen s i l co 'ras I' a troa3enei in the

IS9130 c.-iu to inclujc a f -'e-l.t tio of r-ceit : and pny;ments

o'f -tat., s, couj ciCe and j Ume i lrotr l.cal units.

.. mov-rei c : s i ctdrrted in 1i39' t,' Dr. w. F:. 'Ialtbic when

ed'itur of '.,.ni-ipal A.ffairs, to t .3 s Lihe FEel ral '.g3vernnent

.ubllsh 3 wide -..rn;u of comprThcrnsi..e irmin.iLcipal financial


-3 ~- 17:-. Thi ; .ic. neric: re Sult*d i l iJ 1 .in i:.. u;ei=.a .:.f

; :4 1i t Ci f 1i'jr C;r 3 'niciIh a'trc :. d rh.. hUeur n n ;: f

L : r rt ma- n 3rnual :3olle 11Cr-i ;..d Fp r ei n at in -*:*. 3 ::i1

- finani a -, artistic of i th :i '.'er 30,00C irnh.t-i-

:~nt Tnri funr:tin i; tran;-'rrei tc the Bureau Lof tLh

-r.sus n 19'? Inrtiil i.'.crnmeri t t efforts in r-.i r ii a

*:.- rar g cf lo:, l : -..'ernmr r,t f iranc 5 re1 dire d Le

m-7n- -..ers, the chief S-t i t rt-i.i an f r firan ,' and Tjr L i a

s :at zt z. F.:-.aer n t-;n *:c 1 sel .* ;.,ci ed .irl ril

-'t :.f th : i' l-r.. l "i' ii(-.-al LC agu.- rc. -* u- u Tnirr .r ,

-- cIas i atlor ard i .:Sn r n Del-i .:.t.'t .p.r i l

S---.:5, Cursue J hi '.'or'. .'It h c.n.idtrnL : : 51 F:. ..r *

r' r tC. r ri j ti s3 ::u. Css ul ri e .-.rm led c.,,r:.. .-.. a r tl.

-- -j t f inil c i a daft1 h r f.ll.:. 'n qj. _. i-ri-. r '.e ia.

:- '.ir.u g ,it th f-r'.:,r *'It- ni.: s . pjrsusj h- a iS asi..

-y MID r'oral e:-.ceillen:e i c:'.arrren al as r in prr.*atc
"..; ne'-. 3;. T"l. cure tris -.err.n, ,n al ffi:l r .
acc aun--s .'ill, : f .rc ':.f :c.ntr---n --n loi. :f
histor'--CDe mad- uniLfrm, .a thi rr-e r rsure d te-t
anj aid of cfflscl eri c.E admini=cratin . H re
the St rs -ire fiqlitinr against es'. r' jSi3 rn of
corrup:iln a5nd cf il.rc : here n i .'-e tie pr :mi e
c:. that throu-~n r-gq neri atir, .f ac- .ountr to tihe
needs cf .'hirh *:-ur ,ffic al s li.ra ten c:.n.-i.:ted
and in a larce degree beer. Cn.r'crrc.J .1i

19 Crri d r.Fo -.r "'i:', Eurenu .:.f th:- C-ri;j as .i n ..gSenrt
Cf -.ninicipa1 Fco'-r," rio:eedlng: of th r!i Iil2l .nI3 : ;unr, i :i
Leau U 1303 I'h lad eipl.i i: aLion.3 unii U' A7i uC 19i' 51
-r 2r --


Tn'e -"Jie J "f 'r-r.eui Ioad InLijil, i:,Lt.nhL LO us, .Frincr

:a '. : 3 p, rerar-.d r tca: i ,a-.: .i ur. its as L bae;. i f.T.r the.-

Eir. incl al d th' i; *oii lect i. TIr.=,' :-.-r.n cund tLrO- un.cc pt-

aL IUsc.Cu-ice of thr'ie *'e rI- metln-od o-f i:c-.cnr inr.g, -3srinj

cl _3 lific atiSa ':o 3. ac.-.int.. irAd thil dif rf,.rinrq orgarz i. ati on l

--rirjcture" Trn Eur.r sia four.i thr t. not .onl ..:l z financial data

p C:Fara3 lae betr. eon u icst in nr,_ :.a;..-s tr., d.at .-*ai not

r t- icl '-eL -.eCP y= ris _- i nhe siCi1e unr t. In tthe ., n ieal

-a-.i ..: .f Cit i 3 printer od ; the id riu r. 1311., Ie in

:t- d L 'totrd t the pr'.le i T th-, -n:.ioi[t r, i r. rcc m-

---.-9 :'.;p tt d.i. Th irclulo2 th:- r-Lt.C.,J f :if si-

:~-i'ri ., r.c-'.j t o a '. c nt' i fo3 r ird- p i t L',erntr.i >excrarls ,

r,-r.e:e iri anrii::a .ni al s.uctuc anri Jiffz rc; : ? in

trctir TIr C.-; u Eiur.,u prcp r,,.r a gu Id-t.C': :.n

fir,..*il? r1 -, i t base upC. t.ie r -' ti ,ln re or :-cen.l I. h; th.

i- :-'-.i nu:i ipail L-:.i',ue. Euc I-a a -jentS arneM iitr tLre guide-

:.-- re -s -?rr into the fi-i l to gq nar, correct, and s'airupls-

-:r- t-,. pal.l,- ried financial reports of local go'.'ernments.

"in n-: 'iOt r.- crit, of cities the grants of the bur-au of

t.l-, Cennzu he .' b.r, .jbli i.ed to scrutinize r r acticall' ever'

-ri.-.; f tlh pub lixrned financial r-port- a -d trnce them to

Jsr ac ,ri t3. "2 L:, -.n turn of the -enturl- there 'werc 158

ui. E ruJreau Af Ce .eus, rinancr l Stat i tit- of .Lities:
'1911 .asiln rn i on, i. S. rG..'rnm- nt Pri t.i nj i f fir 1 i 11 pp.

r1. Gr=.-, P wr-rL'r "iUnifrm Acco:untin. i in ts. Pelatinn to
S'.r:.i t rt e .-1,jni-ipal Stati tics," Prorc ,-di n.; of the Niational
'1ij-i-I rp l ICea4uJ i .J- iPrril aJelp-ila: Naitional .Ilunicipal
LE agu 1I4C41 p. 23j..

*' i: ::.er 3.i, ii.'i o u1l opr. WT ..r ar. rn' c CL IJ'). I

-nrin-i alin-: rc each ci-> ham *:OT| i rcrsnr i, :nri

arid t c, :' mc.' t i.f tl'-e data is jatihere Iiy mail arni L r, ::.t

.z :-s nn,: '-;, fU ''.ar,.

Thr'Iria.Iiiut the ear thns C.-ruI Bjuraiu hIa aim-ij ri-

r.arl', .nt c:l. tin? 3at.a :n r -c:n, c and *:'<:-c3irr ani

3=-r.-rall, -,5E n. idE nrn actteii .p ,-j rirn- c.:. pl t ... l inc

s.-.^*;: 3i-]ijnm i T i ir[ nl C- .nq c e Bur aj i ai ic-jl t 1:

7 -e urt. The/ 13_ .'.a an e uCa lo 1 .L role in lnar-:r *r i-e

I' E u- cC = 'fr l in pn-pE,-ul ri- n. .*n ,i:.n f inarc i l -rm'--

L T a.' Ia nu., en'. c -ate, n, t a.n n c .tF=L.ti ri l -

i -. 3 :; .: ata .li irnct -Jnit lr:.: l 3 'ir-' .:nt f l -a ,.:l ai i.-.ta

.-.a3 : an be u ld :f f c: '.'C ,cr '-Tp.sr.3a t *e ar all -. .

-n -.E r'.c ee-din 3r of -the r .ti .-nral lur,~e : ,5l *- u -

: thn- rr--nb,:r of the mjniL,-ipal f nance c jii-.-ttLL e LUjr-d

t1.: i-.tt- ti.r. for Lthe fir t timer t,:. "pr in: iFl s ?f Ic1. -

.go"crnrentn: C.c3un.-ing Cl- .elri 3f te!w Yo.iLk Unl'er's 3it


A ;ystEci, of ancc.,onts mir-'. t.al- its forTn arn character
from the form and chara3: cr tf furnctic.nr :.::rci -i
arid a =uct .ul rs -alt In 5iiilar frinncial r-ports
in tl-.e '3rlous cities.
To supply; tc data e sbentLal L:t iner.-llcjc1rt u.Jgde-
nr a c u:.m let d uj= l.; riLr_' 'r.ee, c.f icc.?'Jrit il
ncce sary' rather than tli- t- n .; rmonl.ril,' a.id ..Inr la
Etitry' I t';:in.
A proper cl.a,3ls.nf.ation of a.:cc'unt re-qu-ir r- pr:.-r-
tier inr-nd.-:' far ,iontinu-rd use be sE.;ra._ ted aind
set :.- art fran ar. ;. t- to. .ht.l- tnr- cit; i Ic.i :=
a mrinans f r.a'm.ent :.nri that th? .:.jrrent liabll itle
L.' dlEtiniaulshed from' lonot-tr:.ri l1at.iilLl,-.

.i- ch pE~ .r o. Ci of fi: ii l. Diel ity a

!-. l_ -z r d.- : ..5hichi .ill reCf'-l t -ur e tr,.r,a -
::n ,i.ti rini . .:in .r, tn. final :i.rnjiric.r
nf a: h ft. d .e c. --

Cl '.'1r.3 e:-.:arnjed on Cn ;5 cc.n.:rt-' n i n rLticlCi put-

li-ris: cih fi.ilo,- in4 ,ei'. In LClis article l-e t.a tai.

,;ri- .r c l i. :::uritir-i 'l. ui. L r a t.:ier.tfi r
i Ti ai. 1h'1 ch, assif icatio'n .3f iac.:,- rnt
-i Il a .j Ci ch-.- prot L.. or inuiir:ip il ir. 0a ; -
re-rt ni c:-ntr:' ari.n t'-i inf rn atio.r, ne. es3-3ry
fc r L:cluc .1 r,. -2

F -r r ti-n at tr.i t1im., 11 .Jl .p rn "frirer s C.f j'niforrm

-: n an r. d r n J:sire :c.nipratle mun icl -ta-

,-.f -~:a l '- r rations t:- enter up in .., fr l ,

-..' ie di -::u i.:.n of i t prtrciples tn t should underlie

J. :zpal -cr unt iq .

S -. j : .' no c .mprel .en l'.', ner al l a.::e rped aetL of

o 1 q..'-r'it C:countiia principli iirctly resulted from

a- -rf.'.;.r- : r'.-j i .nL t.i iimportanr-e ."f the reformiiers efforts

r. .u not L t. rd-rescimiaej. rte m O.'eiierit did tjurn he spot-

1 :'-': f .ullic F rinicrn on lo-3l ir,'. :rriint accourting, its

i e ni:s:e and the need for iarro.' emnt.

','-i':A ;.. Cle"elar.d, thatt Conratit'uts P.Reaonable Uni-
ro.rT., iri hi -al :-ccount 3 ,and F.-o:.rtz Proc;eed nqgs of tile
-ai!.-,:.1 .lu;.Lcial L aqu-.. 1:',4 inr-il.aed p;-"h a: lijtL nal
n.i : -nial L-: :g e, 1904-1 pp. 2'33-15.

r-r i:'.: ;. Cie.ela[d, "The Nirnnlarure :rid Phraseology
or I .'lipFal ':driris ration .ind Accounts,"" 'roceedinca3 of the
:-.i.:nfl 'ioizip'al league 1905 (Philadelpnia: J-Itional Muni-
,7ct:.-. l .sc -e. 1i0' pp. 2z5-43.7--

24 Eo.rus. *"Uniun form.:.countir p. 2'9.

:: ..i I

r'urrin c.ii. t rrn-:.f-tle -*:I-LrL .:r' pC rEcior'J ru..i.t ..*f c .rn-

iLc.t:- ainj tel te "-ar-e f.:.Lr- uL t ..i j ir. a.cceptedj triCt r ill

affect t re rol a3nd funC.in cor, i..:ic- : o"errn&niTi acccur'c r

to.ja'. Ti- prine t.c' *ers of en r f.: or r"cmLnii in irnet : a:

vret promiiii nen t usin= -: mer Frri tr,.Te- re if rmeit rs gt th -'-h

i.'ea trJ' t Li-'C prir, ci ale;- rf "c' fir :i nrt b hus-3: r.ar- 5 =Mctr

cul" anr.1 hou:lld := o.F le a to ic,:al c1"err zr, nt.

Hi f th-l re tC.O ir.1 buS r. -,i3 nI "l' =..'c r t e :tru tjre
*.f tit orl'," ct c*-.r jrrati jr i a C ii, uu3i,',:; a rt. ni
,f theL nir 1 .e-rnt :ErtjI;y ,'itr p. r t i.C .1i re e: r.-..
He, majd fam u= L'.E 3 -se mr In . r.rat ri, r. l ra
C*'. SIiripl,' matt r ot .3 I 1' r. LhE "pr in11 i
of C : c'1riC3 L rS a3' 3 rre ri t. -

-. lief 12 "cr potuiar er tod a anr. miFar.',' i ca g .- rr,-

-ert cina I.2Et-.t E zar.pai-r. ur.j r tre Lbanilcr of run i rnin ii' t

c-. r.r ,-int l i'e stre:- .. .: ncr c;ri itanct 3 tlisn; .li f is

t.-.at i a profic-mai-.ir, organi-rir-r, to funitiorn etffr.i'.'i

re :-ir- an i equati: ai-cc.urnti r, iti - n :r ,cri I ,1 trhe ca:

fcr p'bi:c ,Drgariizaticnl .

secor.J te-lief that arose ta'.js tnsat for dimocr ic co'ierr.

nort -- fctunctior. ri' i El'' local lc;'.'-l there mitrLt t 3 snr

.deiquate3. flo fln3nrclal inf.-rnEation bL2ti.'en thi loal

*c.'ernm:-nct and i3 :it :cria.

It itri e ..uDl :j i mi' t al pro 1Je it:.-l f 'iti- tr,
m e fans f .'crTLIrig inLt~li cent Su-jF r. iirn oi.'-

ahar]c; R. .;,rion and Charle.: Pres, Co rrnir.q i.'Lar.
Aner ica, r.1 .j ic'.. -.r' : IcGrar '-i.111 Bo.-: CoT. ., 190 ,
.,. 3 2.

-lE fi] i3t Cr.5 i' r .I rcC *. it; r..)i 3c-Et 3 t -l--
.and ,3 in:r . i. e I a,' r .c de:a i in n 3 reforLi
:r.. c en tll[ IP ;, Ia'.S .e j 3 c rsenrit1 g e ,
S- t' e L :i 1ig t -- l- i tjit Ctr ma'j r L- L &I,.j
;.a r ti.r- d:elsed FAtiei pubtie :.:C.uir t a rid
r r:3' ar a:rd ac.Lrc aC r.por7rt -

TL.. I. a form of rati:,nadl rin arqiume.nt. I-hat John D-E'e L'ally

nevc; t r r ti ,- tiacal. cCu- .in tcc. riL.e ".;,.. d" Ci..l ti: al

7 1:': 7 1 o.n. : ae-a c .nd r libl inforrmaticr. Irif: Cmatioi

:- it a n iad ncuid bL sup. l i LP' c uLi.- i r, an: 1al reports.

A nird *:c.rnc-p that ip -niated in this ir ra in, reed

a tas.i r.- .:L irig of itl piur oc-..: cf L oc-l i ci,'rrjrienr':

: r.rir :. 'in z t-n- tieo firn.r:131 rpc.rt inc "as areiij

:'- :- 3 ,;-:: r [-.L.ic of c: i ion'. t. "j I r. jld

::nitirn .f -i r icanr C tiCiC 13 z coirlu:te-. i itn r. r. pr ,:lpal

I- - t. OL]it C .--tiat f rci..'in. that tne tra-isu r -3i.,J

: 'ier ar; ..3n F" -crm.r.-; ad-cc tcd that tre i.'c l

c'.'r-: -.. .irt ::.'unti ; j'i tern Uibe .o J lY.lri-n d that it :1:o pro-

:"-2 3-':isionr-ir. kin3 in formation fcc both .- it:-ns and puLllc

- ial33.

.nrnual reirort. of cities -culd i'.ve .. cst,
cihrL'Ctcd, end eff 1enr:; o.f t ;:-i-r *go.-.rnriment
S. qre value for pres'entiinc and \xpcsoin'g
ausu-. .. ....'jld sdp.ply autnenric.- arid in"-luable
f[ -- = fore intellig~e t le i.:latic.n.2i -

22.Cl-.-lard., -lcap:ter., :.p. 102-04.

Pr ':r. TIh iLrcaII I.o the C-'.r..u p. 3. '

Pr-'oi, Tse Cov.ernment r. 52.

in-. id:--. tr,- ii: trLsiisted ar.S Yt*ir ne-Ionr1 al1r-; jl-- I

still ocrU:Uti i ith E:..t rinr.J l thri bc.'unr, riea ..f l.:r: ,i .:.-- rn-

T a 1 runr iiE t-_ Ad cuL'r-a nr prc ic 3 .

..frtc the turn ofr tlir erit.jr Liic riTiriq t rirt -r.

human tar arni:m fr-srored b'.r che Spanirhi ;:-r-a r 1i c an wr r .r-:... .-I

p.j:'rft ll infliue.zc- In :.:Jr ending ie:.-i g1 ,'.'rfum:-nt in r. r n .

3-rt'ic areas Jic h a: taCLt ati -n. F.roLatlGn, p.uoli: ii-r;r ti-

an: r.u.l : nrtilt Tihe fqii3 t a: 1r- ..t orruft i .r as tra r..it,.-

C-: b, t ae ac-.esl :n Th.f od.re F:r. e.-e t j. t he Fr : ia :i .

r:.ed to L a L adi r :.h: d.-m.inat~ d .:-nm ri.:n li f ain,

t : ,:nt, an.Ai str nr. thl-red L'i:- reform ro'.eme t. T.r dri"- f:.r

c -..; ,oiterei L tihe r.-fit rm r-,'.'rii;~nt rrn isljte. e tself it-r,

-.e. _'rr.us of ic.al c.':ernmernt tructurju Tte .=i. .a f.-rm

to >e g r ralL- Iriirc'd qu r. f.o tL i btL'L ': r L: r

:s-: r a n r 'rintil it CI rtIui' mni.i i pa t1 .

in 1900i G l' 1'e t n, Te-:.;. 4e.:-erilaer ed a .*re- t f ri-. a.,3

tidal wa'.' In ti.- eart Jer.;:'. a cit; JC'.'rr -ernt pat rne- :-n

tse order :f a modern t.usiness corp.rjtciotrn w'r crcatri. ;ljr.1-

cip[ l F.: er in the coiTt.i exan forf af g- *earnmihnt ..as corin n-

tratcd in the hands of a fi'.'-e-man c.-.unilL Ti. e fornm c-f

gove-rr.ment maintained Frecminence fo-r n:.'e fiftev-n :eare

during wi'hicl tir.ae some 50j0 cities 35:.iprte tn-? ln. in inr.

en3 h io.-eer, it pro.'ed ini pcrsiL'.l to Lt3 anlate ti- .:rg rIniz; a-

tional stru;cture of irndui j tL into lc-3l : '.'Lr.-n C-'i,-. 5-

sioners elected on r th La-is 5f fa-CoC t.-thcr thin ra rinira Listi ..

skills prova" ill equipped to adnirn :te r-i-nicicpal go3"rnreti.

*i@f inzreajing size and coU ,i. .'.1 "Its ultimate d.:mi- i i.--

7 ..' D. :' re a1 a : r t- hat i' :- < L r t .' t b 3- .
u:r a fault' inrirttuci.n prc-is.

Th i-.- : e.:l utic.r,l st in: i ic.z '-.e:ruent 5str fuc tur

a3 t addit n o.f fuj i-timcI ricr ssi.-.rina 1 atmin l str tc-.lr

t :.ct -3 a nr .i qr. Ti a rFiL' ct Li t,'; hirt : a cit rinar g- r

'.as 'taunt.:.n, '.'ir. n :, in i'03. i9 13 oPv_. r '00 citr nia

3Jlc cel thr L z 1 irn.a r lji T .5 f .JanuaJ y i, i19 9,

- ii3 c.t:.es ni :7o'j.t ii inr tfn na i.'',I = S te hajd it,

'iLi-a-.g 1:rl- rar I cau -ra -E.tL i: si I- nrrintri cbts to

r- -- tin,: f:r i r-.rt p. icd c'f tir.:, parti-ularl,' in ta-

: ,r'.:- i J, er. *r.t iecad cf t,'.E t *,i- tL r. .:nttr

S=. a a A 1 el -..ar. n o-f i -' al go. r, nienC. Tn- c :n inue.J

i .r.i pL': -s'- _t': t led t.. in r -r is. in pl:. i g rrjiaer

:-: .:-r.f- cr,.e ir. ri-he uri-i-rc: ir of n .i': p._ ]-.:ts, arid

- .r, in of -c.. oafr, a of l-ical i r'.r ri .-nt f crv.i c .

The seed :-f zrnia s.:'n '.'r th. ref-rm mi'.' mincrt fell on

S-: -l. gr.-.unJ inr tl-h field I f local g:.'.ernmr cnt finar:nc al

aJ i r, .: trar.- *.n. Trh r-:forn qLre.u. hz.a b-ee-n primarily inter-

? lt: In .r-: mo in g a 3 'r tn that would r-sult in financial

r rt .nr '.sin.n detL.aild cxp.nsrs 5and r,-vcnucj tnat would be

c-p.rbe r~r iLr urnts Prr3 ittiLncr and "theoretlcians"

".cii nu NI .::. ~ f. Local G '.'.-rin-int in the Uinited States
i.qgu-. IrLter;, tlI-.ns l unior of Local .utnoritiei 1961), p.

Ull ,nicir i 'e.ar c .:5f 1969 i .'shingLn: The IntLrrla-
t ':.ia Citt:' Mana.gemenrt :'.- :ci l-tI- 1969; n. 467.

1i- r iLL fr.lh : -r,.: J :iZJ : 'i I .-. ael s- "- C:--rSl -cs 1 .

T-- t or, JO ," .'menr i : a.c- c urnLir --- ,p-jSi.d th- pi L'i 'I .

fuilo ,rin Dc :u,jii.Lir, F : ic- s ,Lc tr he ri.' t e.: c'r.

it. i-,aG .ften be-rn ar itrar11. ard I tCii.-'.-, in-
corrrectly :, ssjm-d t:.-, tr,.u- p r.-.:e ur c-o.rmonl.
fcilol .di ,n ~:cun'rt: oii pr.i''art- Luinef-l Ca-- te
applied i ti'n-Jt .'at r: ,t n jfri f- er. n L-: pu lic
acc ., .-. a re-.ul I b.lii"i. th- r t ma n rrr.
of princi":l' rla t.e - .- c rit 1t .

'_ ,i s "--. .la ed .I- -'e l:. .mert e t .n .j til of 3 r

c-1tri.l., :-:npi:a a u nd -zt tCtur. Ltc rttA -nrn c n

1 e:, -.: irta e.--Enrt' f i rart :;i i ." enr'i s iT. :i z. .'i it .jr= i

- r L.o t ..,- ,r- .'i;l '. r i- .-:rle 't 1 ta lan.:e rn-e -. LiI-ii s

-nir s f r r m r.r'-r'e:.t irl 'iuill. ci l'. thi'e i c i;I .'

.'-.'- "r tt.Li- ~:- e 1 .al *I r rumenr. D .:c i2 -- i r 1 into i ffer-

c-. :.5 i 3i r C-rJllcjat'J su.fi- lJ *:-f aC-iourtin:

Junl.ratrin3 on i .-cal i:'e-rnrmient ac. :.unrii a Ju-.i r-n. i

-a -C.J '._re rnerail'y limit ted to Fr.-i i 3 r, j ~e .aii .i 0...: rp-

i i.-5 f f) L-n 3 aTij pri-c-dur-r. Litti. E pnin a .as 3Z itr ircd

tz..ar .~-dcv el,-, i[,t of r Io:. q '-rnr,-nt a5 i rI:Il:l. I -an. ja r J

: -rinc,_icl T. There '.-r- ,f :. rE -ii-= .c~ I- ln. L y :' i :Ire.

in 192" rot :

T. jrj- ria ze it [i'y -[pin rion Lt'at trh ac-corrts Cn
s,tater..-i-t of '' rr.n'- n. anid ru" li.-l Ii-;itlut i'in

?ILI ; Tfl r.,-_r i lar,, al -f i.111"L'--- i I5 1 Ac'* 1J-it i ^ i ll'- i':.r] :
O;t. -il- ni s rn: In:., la2 1, p. '5i.1
3j- -i L ii in : 172
'See rci -e n l F.. ;. -al oer "TTie flnicr i r-ipai alarln:-
SheC.t," JoJ- al :f ..,-co'ntin ,, .n.:X ', :c. 2., l.rci 1923, pr .

Er: .1J re -, ,in La inc In ; 5:::. :." :-i .*. Its rhe
S:,i l-.'.. r n F ri _i .l : e I: :

rpl :.11 : L.:C .Jlnt .:!;,JlJ b clssi f ic.,. t fuind:i
ar.l :. rii; .uli.J til-, i 3.:.7:l.i-. -l-~'... 'l l t E
mi:c i i :H J,. J. ...t :e.ar l '' S t f:rth thi
re jur,:,:. bi g ti .r, anJ .uL'js4iJ 3if eazch
fund 1i J rall.
2' That th,: d i -in. tic.n Let: -n "'pr:- pf Ir-tar,'"
ani ''-i.-3 -E t a r j:_c-unts j.l"luli LE 1i rL' -
r.ria j ran.l tr. : ,-e -a. :,cou'- f .c .:r f d.
h.ucuid te uni fr-. fr all Iurp:-e = s.
11 Thl- : 5.3 : : unr C If d : i t i:crn d.efa'rc
iter, 3 .L i: --L -' ij i -. not a-tujll: d-j ,
:h:cli :.ci1nari. Lc .mir-te.
i r.5- 3: c:unts f* d i : .;e nr 1 1 l tres
I'-. L Le i ni3nr iij a.1.1i h the c' e ho:u1 n t
3-,- ir I" J .'rL'-' :t :I .it- i .-c:,Coun. t Of C unj:
ur.l=as the" c:learly rerscnr re.ourc-e rr
:1 1: : -f -h i' f njs.

- '.'.l ir ,late ;.ff..rt -' ,a :at pub11'i= .J lIy t:

1.=: .,t L -':,- -f *.. ern,- ti l F e-ea -.:jl. Tn y cr parE arnd

:-ihe. hd a 't f "Srn riariI f-or the Aliri, itri t i-n of Cii

a-L ,.:- *' ic '- l;I 'lu l t'-,: fol I -w ing :

C-. i 1 rc 1 ira FrriIrcil TL ian a rci.
1. .:'-::,Ltj r.s shouidJ- Le -entrali:d in the
c :*rl trol 1er f i-e.
2. .lunil[al .:count in3 =ho'juld b maintained
,;n i-n r :rul l basic; .
3. Cinc r..l 1-j in e.it'r ri e of n- tn i.: ty''
3upd.l I;. n,3:at.rials cq,.lurricnt, and r ail
estate- shuid i miaintarined.
-1. Unit 3an ]b co.-sr E cr it: .~ail" -e should
5-e '- il- able .
Pa:'rc ll 3a'.1u b, under comi r lete zonrlc:ol.
All. I c .ouiJ nt3 if h clit, shnoul'J 1 ). a.rlit..d
contLi -u:.'J, 1_ or peciaf lic al ', L; i uditin-

-t.,ra :1 ,nu.5l p. 15' .

?.utl.-r t r, ir :p r -. -r. r Df t;-: c.:rtr.lI ''
o r ic.
.. F crio.ic r rpc.rtt to L*. ia3ei ti, t[LI i ub IL-
ri.r,1jdA i -: r:.ni:r. . t .,- .r- tir ni stacr.l-r,-tr, and
Lb aI .a n c .-s h.:- t.
8. ."j i;- r- t ir aU'iu- t is fully 3: ip;.np -r ar. a;-
a caci audit. -

Triese t'.., pj-IlicationrI are r.~t-.' rtr. L--3 3f rt rr ii-

.l ence :r. l ti:.r ,pu r ic cait 1i-. f; t 'lrii ir a' F ra-i: :

Of f: : r A. :c t i:n.

Tiic j'-e t -'l[.'r; :il-r, n th hi -scO'i; :f ti; I. n it.,i t.

.- :ar. i ti- fall :f I ? r. J n-ra actuja l.' 3ri una.ti r.

: .- :r.' L. e ln t r i c f:Ot- a'- a :- a.j l t-r. th n r,,._' ai

i::-.:-.,C c,*:r ittio.- Juir ii: tin 3 ,: .j i-nfl-* :.C.I :;al 31_.1 i L r,-

-C- t r- ~: I. 1 i 1J-. .] 5 1Jh- i 'i.- tLr -D;'.i ir S 3-' ,r a .'. Th- r: ._ 2

: ,- i: l r- tr thr s,upp rt L f 1 :, ,L g r, 'Ln irt r-. r :.i r- a r. i -

e.- o-. Tii= l .:i; ,rof tiiianlrial ,Js[;^ort tj.?,3th:r '. It'i tl'

L :- 1: Lr. nts ot f ~~, i-rnmn t 1r furintction aJ u iniuri o U t- tE

faila.3 L' uni,-ertii r-ls a3 g' i 1 2er:.menrral bd,1, c nntri-iLut-eJ tL

t.e Jcr.Eral dEar is. of imos Lreforn 9r :u,'Ps. Tnh rea--.ure= anj

liel saurhrit h .f local oo .1er ruitnL: .r e.E.E in iiT.L't C:D53

inade-qu3a t to handle the social pr.rblcin resultin; fraoir, rh

i6le earsi, n. ilany 1cal qa.-'. crrun~nt had ber- s-mito r rtied t ; a.

ta.z 3a E thit jIi uca dreci ini;gl' irnflat:-_ by a -r3 *:.lalaps ing

le1- 3t1t1 l:oc,: Inr thi- '.3I'-i n3n ,ci,-t- f -uid 3rni_,,n,_ei e. :

3 Lril I.. Li on an :. E. ijht..r, "3tan ar-i a of firiin
A'.?.il .i' t-r .'r rjM iori-l lurlnici .al Pte l-' *. II IFeitc-.:'y,
1928 r, p L-. 19-132.

ir-r an m,-.;ap'- tne ty -., of flin nc ..i sta crrierm.t bE Lni
r ccr.'u"ninJi d in this p-riiod .* 'e .pp nd i-: I-D.

Ij r. t ii tt r- I.t :rni t -:. iJlrin i: :_ts : f er tir lu'

m t : i.2Ui a'JI tcl; '.ert :'ei in p-uJlic relief r:.1-c .

Fj-ral a~r sat : .'vcrrrniT:. cs -re f:r'cd t p cL'ocilde finan.rc al

1.:cl.f f: r:* tre r 3ar, pre- cj lo3:a] jun-its. Sirn e r.,is per i.d

iri:erg- "eCir.enita1 furidJ-l al..i ch a = :jia t.d a countinging c':n-

'r.i: i,3- :n: -,.I:~ .*:-r ti.--ujll incr :' 3 d. The &r, i'r.-

- 1i l Er. :;s :rf r 19 0; : atej I-,.a-.'_ press 'A -irc f.or cra rr in

1I. ,:: i ,,-er,- e t :iC* ,j,,tl, mC.

"'u l, iCi 1it -i, ,- ] nIp i-. sl vr.; th- inan.-cial
7 .-:.I-,i- .. . Th : i c .Lt are hr a.'t and their
r '..' -j Jr, t i ,. L.i e caI : i .Jt ='.:..33 '. 'r r-
isna.l .--.' iJ t. .-. 4::-: ,u rncha lenerin . .. ef nit
r- .' ] a.'i.jdard- .:.f [' p: -LiCe ian th ]i, ii iniZi -1.l
C- :u, -, ir l- ll i ng L' -.-'i. adl la.' i r. -1.3

n- n.r,: f i-pror ia nt in l:c l -r ii.ent a: c ,j:iting

S .:t ,nfriurl-:.1 rot rt'ef:rm i irin-2 en 'ut b'.,' tu he~e

S--c al c :hj: s3 ,;t oii. tr, il'niu cipal Finance i Offic-rs As-ocl-

rIn 1.934 t.i .n, n:red an org ra i atic:. calle': the

'itlirnal Ci ,irr.ttce on Ifu:r-cip'l Accojnting. At their request

,cin t:-Inal .:rga~i:'atcior, ? IL. r3rican .s'.s-..,ati oi University

Inr truct.r- 1:i1 A.ccuntin .'ineri-an Inrititutje ,.f .-,coiuntAnts,

--.rj-.an '.'unlcipal A.;:cl. tlt onr, jr.ricar, S' -c..ty .:f Certified

FP l .'..:c :.J rtan-:, Irint rnati :nal Cit,' ,lanr-gers As::clu tionn,

ilunllri'.l Finr.n:- .'ffle,' s A.,sociatrion of the IUnltei States

jrl H. Cniater', "H'ir A':-o.rtourt-r.t Can Serv e tunici-
pi t LCs," J:..irrAil of c:- .ir- nc LI.: (Januiar 1 35). pp.

. id C-ain la, '!3 nal' l a r ja i n f Lost .' : ..nr:j r n

'5ajt nij l .',I Zi. rlt.ion. .:I f -t .: ..u3it:.L' o pt r..l1 C l ip

Tre.:-.urerzr, .t ,:al :unr :ipal Lea.muj. Lnitu.d C ates u'eau

of C inasus' I h frZ-ire : a urin Lpal -.c:ountin. C..ruii :tt- .

Ti chairman fi as:n .f rneS- ai'.'is -r c.ri t te-e ajt:.Ta i.:-

all'.' Letcas a meirtL. r c.f tre I;.a t tal C.*rn' tt -.. he :' r

cfforc. a3 iiC.comrmltisheJ priLmrl iy trl'jiro'u an e.-C't ti' c...--

.mir- .hi:h inr.luJis te Litrector cf the r In irc.al Finranc

.-ffi.r-Lrs Asr .ic .'rn, Carl Crat.o-rr Ir.',r n T rrnn r tirn r

-. f :cco .-ilnt l.t for th. or ri i ti:.n and Ll :.' d r:_ .f th-

..'. t of Illi nria T".- 'L mr n fair, ill J d:.r rat :. I ti:

ur,.:.:,-nt= .jf the : r.an iz. :-ni for mrjn ,'e. il .

ITr- rnc ri -tir n '- r ,or, .r: -'n tt.j gi f 'C0: 3.
!,e :-- r aru tr r ar-r' *:r ; :rt-:J a : l3 x

I11 To et. up prin.iple- arni Itanarardi f muni-
:-sp l ac junt inl ;
S21 To de'.'-lop taniAiJr, la ssI f lC n ai an
urniforn tcrnriiri.l- fjr sac-c.untant aInd
r31 T aebarK -,nri an edu ja i -i a- c.pap ig-n to
sell Che-ie prirciplpi and standards to
*o'.'ernm:ntal fiscal and a3Cijiu tin ii Officers,
s ; that the' ma' af :..t them.

The- la:iaonal C,.rru.itt..o puoll i-id tnre r-norjgr phi during

193j the first ,,'ear of it? tnc-ptil-n; .'. I"rta.t '.-e (outin --

Prini l le .- of 'luiicr oal L.-. curnting IJ.an r,a 1:i'-1 i T nrt atr.'e

OJ Lltire.; f -i f 'l -.e't Fr:-,.:- dui f.or a1 Djt.'ii -J ilurn :ipal

''J s rn ,:. L. er "', "Tt [Iit'-rln Cona.it-tL- oin 'i- rr.-
mluntal .a'.ccounting ::'ini-:l al rin iancc '..III itr..rJar_ 1' 1 ,
p. 121.


S- i 1.:3 13 1 ; an. .. EiLUll.irap., c-f ";Lnici a ..: c'OunI ti

0.", 1Z93 ioi t 5i-ni3 -i s : -- at.... l iat c.f mur. i ip.al

qg =rf lrnL acc, untinc p rinci.pie. e ihis : a1 tn- firstt

;ff:'t o-n 2 nation al 5:;1 to tatbli.h principles or

munriiFpal a:c.ounr tin and a cti". el' : r OmO-t. tli= ir u-e."'3 Ti'e-e

pr'iciplie ;'..ch ar .3 L-r -c -J d .-n t'i- fo-ilo..in pagF es are

s -. i e-" 1 ; J _- "n = d :- I I ,. .

The :s; t .pir.cipl-: lle3 fcr *entrtal lin iLir, at accounts

uni-r tr. e arc-erto- or on ctfi:er L.hio '.,culJ b.- mrai' responsi-

t fr' L.3 -r. cOf all fi,,r.cial records arnd. prIa;i ing all

.: i r::t:'ts ih? COmnirtTe stats ed tlhit i.hilc tr firE t

:71_- 1e ; l not itri.-cti a.-, r -3 o'j it Dn pi rirn iple it .'s ra

; -.-ti .ji nl alt i-nal fe-ature. The1; alro recc.-unend ej tnat

c-. ic c-- f t. he f rinane offi: =.l .e made C-.r tI'-i ba is of

r -- ani t.r a e. auajt salary sc.al.es siid rSaaonabi tenure be

"-.'---d -ni r:on- pr--ncile called for a double entry

. : .-cpr a, tem, classic fcation f .acounts by fund groups,

..a eparaiion of th. -.-quity' in capital assets from current

a 'r-lu. T. third trin.i pi sp.-ll-d at a fund classification

yst:i:, ri:eral, p-ecial revenue, utility, bond, special

a:E -,nt -, tu.-t anr. p,:nsl:n, agcen-: sin iri'. The fourth,

fifrh, an-i.d 51hl prinri:i-ls rall-:i for an irteAration of

b.,-'igctar, ;:, i operatlonal a:ounts inclidiLng recnri~es, expendi-

tLLt .Z,. t .. :*. nationss a'i, encuLi' ranc F:e- inues nnd

Cat H. ChatterD, "rii-in -s o- L lunicipal -A:counting,
Public l .arace.me-r ...VI (Janua:r 12 p. 41.


-. r niirtur-s ":r- t-,* be Froperi rn. ::r; stn:-l, class fi e

t.y r.c.per funr ar- *la sifiz .tio Th: s .'r:r h r n:ip1 -k

calie3 for es :atblisiI-Irr t :.f co-rt tyEti-i .-nic h '.o.ull r.aL ti-

cost-" to be all-'icate to. L e 'arl:,u activiti-es t:' dE, art:Ti t.

Th- eighth p'iri.n ipl- -alled fr.r *J-.'eloriiert o-f a ?~ UL .3 .ar

re:or 3 : at .:r :for ur tl) c ar. uiil ble arind pErr ranr.:nt :ropf 'L t hr.

ou ii be cornLir- lei tlnr uLI t-: -i e eri-r l 1 a-r. :.s t =

t be L '-:'-rd a. c. t *.: f 3a'Iii r. l.. Yh. rl ni r.n r inr,.:,r ie

:alle.J fi, tLhe c o--- .unLin, .t murn ,ci 'al int -er ti -: mu s :r, ta

.! tli e t .I hi an. l ijr, -ia i rt 1 i r to .th-r -,i...:1 j

_- -'.at- enter ri eta. Tie C.*:nitp ill i.'iL iaL. u i_ a t_.

S're court .'er : l r' i. an D lj ft it *pt.. i tt :., etn-r

a :- al or 7.- ad couriting was' adoptCI r d 'i pre:iati: *i tas-:r,

.,- I.-i i.t Thi -rcin:iple 5 cr ;i-r rl f I "-i r.:.

:-r:-i in.j ir'nnov tiDr. j.i mnc-t had .:-Gern Fubli- hei 1on. n foi-, or

t;.-..t' r b iathor ir e the late l'20s.

Trx l i tL ri ral c.'rtmi tee in 1i.9 5 e:-:p.ndrd on ch r :.r i ial

Fuil ca-zionr '.,i th the piublic- on .of a!luri: ; al Funa in.1 Trh.ir

Baeancmc Shts Th- Fpt.llat. :tion increiasej Ec- r.'umtb-r c.f

accounting principles to. fiftren. '7h- r- .'a. praincilple are

shol-T, in App-rrilx 115. lI-: ori.nsal pr in.r pie * ---re inL- llujA

s-ome r.- r!,- r. con71c .1i r Ir .lua.3 and a nunibt-r of their r pr r. i ipies

adeded, inoCludLIng rc-romitendtj Cionrs tn; t tn: .i-::rjai b-i-3 Ir.

acz-ount.;.rq for re .'-nu e i= n i .:prnd s n.itu-?re L.- f-i .: i r. --f r

as oractica]. that F nar.:,.al r.oCrts ho-uLllJ3 '- ; .r saed -ontil

or ofteiier, ar-l that a peric.li .Audit ma-c b.' puL. 1c

liaccoIntants. Tr.- outliCat.ot n ali: recofirrin-d that sc=;ratm

balanc-i : hets '*iLth proF ri Car'- an LLud.* e rari r a- ':cunt- be

pre-'ar d fcr C. : funt-i ari.d :r.nr l rcoir-. imen .led a-ain_ t U' e

S.n *:.nr liiJt : i ilarn ial Statlrint;s. IIllU trations Of

ri:cnu n.iei tL.alan e 3n;h-t forratEs -ore in.- lu ed ~rd a copy

: the rec.-:mr,-onrLje. balIane -- :E!;t for the Gen:ral Funr

sh .'nn an .App cid i.: IE. Cor .are this b l r ar;c Er-: r .'ith tli

,im.Fle State tenL to .:;AEL anid Li tjilti .-i r .:" oruended by

..' Il 51 i 1-rl ni .ipi Leag'- I.App 'cndi- IE) and tIhe rea i r

.ill 3'.,-e n.r',,E i.iea 'f hi far thi fin cia l recp orts had

e ',-:lid inti a .im Fii[ cat-.ei subfield.

E 'jr rin t -. :. t c-'i 3C l je.:de. th-; .lati.ral Cirui ttee

3 a number jf l:-ull :tir o.3 n c teriii. audit pro.,cd.-ire.

.' cc r.ur. in 3tt: m a [. s1 -1rn if1: nrt c.ianqer in r.:rcm-

r-ra3- a:cunti'ng prrr.:ipl; s .ere -iade in thea. Dul e1 irn'.

Ih: -:; inr: r -frf.rt- :f tle I.ati..:n l C": T r. t e ':.'r- started

in 14 ..hen thI: pr.: idern of tile IljnicipF l Finance Of fi:ce-s

.Ss:clatio. r ea:!.iv.ate trie rganizal tion which h :..a t, ce

rIn- il th-. I[;ational CcOiumTittee rn C:'.'errmlental Ac .ou.Ln tng.

7h- supporting o-rgani:ati:,tr. ,'ere ca3in as'~d to appoint

riJni.ipal accounting committee. each ad'.'isry zoT-maittee was

requ' -;teJ to rT'via- the existnr bulletirna and submit criti-

:Lis-=m and r-c.:r-L mendations. hi- -ffs :rt reAulted in the publi-

.*'tl'n of the well KlinJ:-T "Blhuc Pjc'" I('unl.-p'?. Accounting and

.k. li.ircq, 19511 and "f.edBhoc." i3tandard Classificaticn of

Thie revised set .-f principles as published In Bulletin
ii. 12, 1941, is included in Appendix 11C.

Ilunici r r--;.1 .'c C:o nt 1i 9' iTr- *.raft ,L f .th r j L tici : r i -

"cr: prrcpared ou I:.ini icr.nerL tnie -.fcorricr tc' cc.-i.- l rt- t.

The: t : c'.J:- plij licat i C Le:Ciia rTii 3st ndai rcf er : r f:.r

mian' y lCcal *.'.ierrTim en[t fir in.e *:ffi eL' thrlu'I h., tLi 1 50s

and 19a0s.

In ;lni :ipal .-pcc.Iirn tirn a-ndC .--..dir in a v.--iizei :4:

: rincipier fp r lo.1 :a1 ':. ern r enrt n :c unr ,J c jbli. :h i'i

tie i l1 publ ic;: i: n h: t h.i teeri in prior Fi p bli.:cir ta rd

;rirn:iri lz noa r 3'JUJ 'iJe Lrt,. t j., rcteg. .riE gcrinr- lC

ari r. cc-ijr:-. h n priri cpie; n tr P i 35 FU lcaI 3'_:'r ,

:_ i .- ic'J e in t-c r: "i .:.r ..if 1 -.1 ir, r .- c tase '. rbat. ir

S sditicr., p ri ; .ci 1 aE .7 -!rn iz in. t-j_ l r,;ort ia.': c .E Lfth

-:: -f 1 3.; r.rd'i ion: cjUjC iiirl *a.jiinr c ria Ltl h;'..1

::.c -,i.ny fun:i, cr,.3 i.c nr-runai lr tiat C.i cri.riK .ci' nr!'-..,n c r. i

cl C=; = fi ti.n sh:Liuld bc i, Cd thr.-l-ih -,,t lth -ntire Cco ,jnt g r

r.., t- and e.j I'liE Coi-ui A '-te a tt Leptce t_ l ,: 1 it-

po.szii.rn on : jiibinid fuii balarce sne.t ;:- ich it re.:, ,.- ari

ratn-r thar, conori liat-d t.ate-6r nts. Oni',' rln r :hi.r-ian re

trade in reccnrrended model statercents 3ucr as revi si n=- in

ca3iit rnar. hic dinrg or terr,.iolr.og' :.jl ri:a i L n .-' rch as Jri.cp ir i

the term r c-:r"'; .. SiunrdTar.' f th-: ~.:curn lt plrin.ie.l- aind

proc.-dur,-s as c-l. ,'.31sid in r 'bs-iic .jl :', i:.J r jn1n n AuiJ

are incl .A-d in A.poerni..- iID, an.i a sia pie Lal i,-.e :-eet in

Appendix IF.

Th _e Coa-Iii--tel -'s 195. liciartin, .n Stan.djar Cias i Ica-

tion of .;r l.c p.l ":Cc, jit:, "de iE n-dj to s-r'.'e a; a n 3i

for bcLnh .diniristraic- :-ntrol and tihe :cr.iilatirn ..f fnirirci al

S a- :. D 1 all r. i a I1i t elp z l -i.- or t rt. lcDzal go ern-

7. r .tai u t .is irrespe:ti..e ao tneir i ct it., stid:.tur,- ,

r tm f ac r Lcouitinq he z.urli a t i cion pro'.'i'-1..1j -let L

e..t.rni~tcicn c-f bal ace sl heet rc enue, ardn e.-perIdi tuLe

:a lr ns Pre'.iLou; ejitions h ad .nrc tIj Ialance Ehe2t

zCuounrs. In th c jSe of i.CCoiint --%tc:iarie that had pLrE-

" .'l 'i,: i L beri puLli Ced trhe u r jtej b:: 5 rn '..ertc el iminated,

rie' 3::o',.'a t a.1 e. iand the ex lanacr cr. aipl ficj.

Ti.. i>-m.tti .n p.ric.1 .f ': h r -rc;t L'pre s r:ic i ,.as

-I- t.- r:' tecn ? tr .i1in i f irid t :or.te-mo-rar 'nc.e. tihile

1 ic'.-r r ?arn L i. rot ce ased to Le ds: L'n mat c r. in

r: -- e he- mus.E ni.. i'irt ir'.p.ri art d;,eci_..rs.. Tnc trend

:1 arn :o:,, E 3Li L. L. ti *L' d 5 t.l.n ng c.i = -i ri sp'n i-

c_-i---es r, fi nar, :i.-, anid :-onLtr lo itn t ,hose of zta;e anr

: 1 rl o"e'nnenr t Fart .ul arl in tihe area of 1Iujarin

A Britisl political scientist it the turn orf the century

trrnec the goc.ernment of Atmericran .Iti-s our one corispicuous

failure .".riin notes that thor.h the s:acemert 'las made 65
'ears ago man, i'-r.ricans bcli..'ee it approp:riatc tod; Local

'.-' .rrircn- t today, are pla.igu d .'t!A 3 i t lituld of significant

p-o't.lmi. The p'.pulatolin of our irtan arc: doubled between

Ir'.,in, T'enner "F.L .-se Claj. iflcator10i of Accourts,"
M rni ci, l Fin nce, ".*::-'c; i.:bruL y, 19531 p. 10i .

.,iri.ri and Press, Gov.'srning Urban 'jner i.:Z p. 2.

.-.e Li'.-il ia ~ t-[ Ur cr t'-i- Cent-. i c r- i r- tI.:.k onri,

25, .*Ir. f: r it t: douL.Ic .aq ir. L, i0. .i .:r :, ,:f t .e

po7ula3ric.r c.o fthe- r Un re.d rarte m a;., Il.ing in iJr rn a n-:a arn

the run-t-Er :critrin :s t-, -.limb. 1hili urrai r rcs ,a = ,- ,r.

increasinia inF pc-pu lati.nr, tiIe c, er.;n r l core crt, ha dj--:li ied

and l-be:om in:rre single; t- i hm.:.in cf tn: ec;onm.:ri: ili Ji;J-

.'a.t :ed. C-n:ri.l cities riaj. oeian f.i J. ich en-.rm,;j= p-cr t-

l.-T3 in the fields ojr :r ime, h-alth. --u:at..n transportat,:r,

and el fare. -Lo. al go'.'erin ieln, .a be n forced tuo <.:~:: a

trIht-c. 1 -ro ram;s .a.d :ad nr m. one- n,-h f_.-er ch.r r ela-

t- .il; inel .stic rourc:e of r-e e-. g_nerLl'jl icrrt. it-

I-n tn trend of cr e 19s t tre and f-Jcerl a :-i.-1 h"-

r-.rezi in1/ p-la',ed a m T or r ol' I, f rianr z rn iin I jd j-. n i t r t :.-

S '" .il" 'iJL. i: ; r- le r ,grm r -s.


T.-e re'. aei o t rh n i torii al di'e eLircF nt -,f ic- l -.. rrn-

-a-7: aro-a ting zand finari:I.i rE;-rt inq pro.idae cn.in-'a -erable

insight into the factors affecting ic- e-'.olucion. In rrar.ing

thz d-'--loprment, an .tucr.pt J also m-jad to i nrcl.de -.en

per onages, and pLjlicati n that affe5.-t:c Ioial go-.'rnment5

an> their a :--ounting -y te=.

A.J.derence to e;.itlinj tr.d iicin nis Zsrn r stqri fican t

factor afE eating tie dc .-.li'r nL of loi al j C6 .El'e rnmllt ia -oL htin.i.

Amcricon local qcgv.-rnri.'-.t strJz::ure -'S de.i.l: root,- in the

mast, A. ':ith mo= t facet= Lit lIo l *o'.'ernenrcrt tne i::caun ti

function .-'js or qinall,' a:ied on thb cone -7 'rs jnd p.r j.tti r-:


r. r.ipl an': ith th.; [:nal nI i *:ul.l:.[I I-* t ;. me- :f th:F o *-r]n-

3i:- an: pEra t -.c hal Fperr i : 1J i r, local Yo.. r ri r,,.rr: t '.: CiC

tiir ugh to)d ,'. Ir. mia n rural :-,.r u:i .I-iCl E t1-im-i .r appears

tc. h '.' shed -...'er tth c, Lrt,,"a' se .Jus ni. .n moi re t.,iur a

riF ple ,f cnan, e. In-iti 1i the a.cc;.i ntinir funct:.r r.,d

sj :em" cnli in the brc.3dert sr s- :t il exi-t- 1t sU mi

pl-_jc r, F-st-c l :nial accc.Juntin,.] ..fn sced5 primnaril'y :.f

nr-..intcir.t d3 record ':t .f '.-r.: still c. e a5nd w''ho had paid

tih ic r-rc.op rt,' c ::, a:nd a i- t inr j :f ca-h di tur3 -.rr.ts L

. rrrnt. Eipn .:lial re-.rtin in a fi:- r l sr-,s- 'a qir.'r,al.

.- i.sn as u'nitS .CDnism:l fZ:' : ? r .:.urc.s ni reni r.ed re1s a l r.l

-iill in l: ... oral r-.p- rt irg at to.n merr ti ng s an.J similar
Sr:' i :, as : r m rr.: sat rrar rtor.'.

TI'..,s s i listic rinarci l s,'srtimE FpersT tcd fcr .

;: -ar- co ha'.'e L.-.:n i r:mi|ar!: bly lc.rin tinr In -,ie:. f the

l n ns .-:f nist.r: th- is n:r, curprsl. 3i Tr-- us c.r nocchad

el.7 Co -pli-tn callE r taiilli perrised a an Integril part

.3. -.e Eiglish o'.,ernr,.:nt fir.nc. e E;'stei until 1 126; centuries
4 **
after they' had outli'.ed their uzefuinea-;.

Until the turn of the c.nttjr;', the United States -as pri-

mi-rily an agricultural r, ti.-jr. The accountingg -,stiem in the

f.r i e- sc.tor of this c.:.untr; had ri -t eol'.'ed as ftd-t as it

hai in m,-.re irnd utrialized nati.-.n-;. Thirs an- the adherence

tc. -raditi.onal mr'-'thods contrilut-d significcan:l to an. initial

42RPudor h Pc.L:ct., "A Short iHjstory .:f Tallies," Iccounting
Pesearch, IIi IJul',. 1i9 1. pp. 220-229.

lac ci:.f J- ?!1Fl:-Ent n Ig. Err.r-.nra 1al 3 :.u.-it in i.irtil th

ra.id :- j r* c i.h cf thI pu I r; o- ir, r:-cernt a-. 'r ir r L-

ti .'tE t It f s'elop1 e-rnt .: f D'ci -un t in. in the pri'. -=e .:t.:r

3seerT t. ha" btee a pFiCing. f acrtr on c.jange in thre st ten

u'tl111 i irn r.tha r.ju.l sector. ;.:. the nation L._car- i: mor

in-lustriial --' in tlhe p:st-C-'il--'ar 'ar c u in: in t-,e

' Ir- te s:- tc.r d3e' l? ed tr meet demand: pla d c. ,.r r ft.-r

t ,- tur.', tf tlnr ceraturi, Tj ari ju :iln --- -jrn :r -re ur :i i 1:.-3l

rgoj.' rr ti nt rc aj:ip- rh F r:'r, czcuntirng L -:hrnique-:

3 *;r.h tr ::E ri n l:n -.f ch. ,u:lic .ect :,r 1r, r rent

dae i s and r.icu1i rl, 'ri-? 1a : Lt n ar-, tlii =-I: r .

:" r :?DT: 1 'f a fa t r. '.t Ln i has rn. r-,crn turned t

i: --E -,ent de'. = -i a p itr, o.f inr fo-r ati an-a'- :Oun tini, t -.c-r.,

e ; :.:-d -Irel-.:i l ', for n:.e s f thl pui.lic ,ie ct,: r.

.lti.:ugh f:r ar, r tlE 2IrIale1r unriLS. the simpI stic

cE--sh basic ac.: urLtir. 3 s n't n c.OrtinijUC t.' r.- .' rn i tz : i.:rin

neeJs, su-ch -.as nDt the :cai in our iar.;r ccitie-. In tnr

nation's fa.t *gro 'in.r:] mtr:.pF itarn arIa1, tti inadJqu-Ci'es f

t.e fi-3n:ial-re.: rtinqg 3i t am 'c s a;iqnc-i a signlriceant share

of the blame fc:r th r.r-a finnc1ric l mil aragea-inTeri- ..n, :n

occurred ht, : t.er s t e Ci .'1 i.,r i-ru thi-Z turn af the .:rntur',. nTh

pres3sre of oriauni .lti rnal rle3 ; .c'rlr Frinalril t!irouh

reform agr: p:- creatrcd the i Lpetu for changeg. Tr cq.1 n]in n1ec:

of pcubljc or:ia-nit arrin r and trncse ';-.,0 adifinifi t then, thr u1, ,-

out the ycar', ha'... contirnuec to e a prirnar factor in, ir .' -

ments for nch:an.: the l.-icl go.'.' nmesnt accontinrg-re. -:rt ing

" : -nm. SI.nl h-ia c -,rn T,.-.t e Id.er t in .qir.: 'in3 rmetr L it'.-p

ar -- lire j.miarnd, .:-n ri..c a g.:. ernrment: Ih'a.: b-c.-n create t.

Tr rt. rrn :.f tnc centu ry iroc l :'.'e rrmren 'ffor.fi, gr.ou-

pl ,'.-j : -lrinificant cr la in rthe ;.iuticn E of 1.0c=l go"erniierit

jc. urtinri Prirarrli;' tte ref :rni-m r '..ere crir.ir e:.:trnal to

tr.e s r. T!ey .a3. ir.pr..',.-T. &nr. in firna3ri:ial r--p rt 'ri a 3

rn;.:e- i r.' inqrrdirnt irn n ir-pr'"-j = ySterm -ft acc runtat-.111ty

frr li ? I lcr'.'errr. ment org anl -t: n.. Th rtef.Q r-er' rather thnr

; -l ''V-i Lt i he d i espr~ d -'3:-[n he, -,nad lrn" Ils-.-,&d

:. j ..-re in !t.e r:le of catalafst aTl2ey ser.'e.i irn iome rriej-

sa 'j ld :-irtc'.r ,in r t l finarc1 al L',.t-i ujp Lo uti l ic

The'y l-erled clar f the iip :rta ,1,ce f t:', rv le that

a.:: : rin r -f rin r, al rer.rtrin ciC,.ui pl : in Iccal :-.'ernment.

T ; crisc. alterrntre aolutio, n to tnea st atu : u': and tl'ey

':r '.2 3: sci rin iegi3-lat "- a[.pr.'l.'a of Ir F.r':.ved mandated

TI--. thliy rdi n.ot ha.'e m:.re m.aurable ucce--s in their

--r-ary ial :f s.~:-ir i1n local government financial data of

ir terunit comparjility is not sur rising. The practicing

rei.--.r.-: of an org anizatiorn are in'.are el,' siu to adopt sug-

:g.5i on- *Tf ":..!l-newaninq" ou'ttsi.-urs. ;. in many such instances

t.- rleft.:.ers :.'erloc:.3 irm-.-oitant -o.lint? nzcczs.-ry for the

s.:'-a. c!i aigq. The propua3ed change ov-.erlooked -the necessary

,l-tailei mcechanicc f-.r implemensrtatton of the broad improvedd"

-'c tem. The rroaEosed repoCrting aind necessary existing house-

.e-'in7 [payroll, ri.i1paying, tay r-ccordi functions were not

zuCceFLfully intreratcri. The uncertainties of the changes

pr, .:. eJ ".er, e f.t j t licai sifl 1 i ntl, tn r-:, trilrin.-. :.

: c'.' 'c rl s t jr.L t c- .' ii rig the sta s q.u.: I ._ t .'.-

actjull c' e,;1-. c, in r c 'rJ h.eeing.

Th-. effrrtr nf the fun.i- cipa ,- [' i c r .'.2...1 aLl rn

ha.e pl ,edd a ima]zr role in n: I llutijr, of .:.7i1 'er irinm rnt

:7:. nting 3.J:" t,.:- T._Cs. Ttie A- 2.'ciaE n rr.s uni :ubt.:il

r:en n-,o '. tei j c 'e IrC l f ct:.:"c t: -:;..3i ~ 3 in th. r :-l th.ic

av a m i Taa z 1sie f self-p :F.l 71 ri ; an e'.! Cii .- 5 s: :r.

F.'.-:- t.r. : t i" ::, t ,- trh e .:per ea r.i the.:- s st. i L-e

s-._: tE t.' ,: .- -::-. p in ,:.pl.-: "r. l:us, y : ir .,

-.: -'_r -: ..'-, r- c* 'ra -'ii ti' n r ,- 1 in d- iT :i c R : .-ID, ,

-.- r: .'.i 3 th d si' r t... a:12' .' :_r :fe ':1i al "s t aL I

i- tt rilart ; o .: -.-: -fit In an li1 .:.* risui : for z:. -

F: j. l or .:i : i A" p i -.. **'.: p inciplca f..r l mi:iji r

5.-..t1'_ 113 oiff i : 1 pulic- rt n pr, ,iil r- n :;. p, *,i :,' :- .

- .a.. h g .li:e of j ict iL '.

t.'ic-'. -Cd I r-etro pec-t :nc prescril e i s'It :fl -niArge b trie

Ass.a3 ati.r. ha'.'e esn relatI t l'.' ri n.or. The re cur-e I-2 :' rn3-:

has t en =.atsfie Ith pa l:d ?f-i 'al iS;suin:e t;a;t V i"-

iar a large part tb- n jm -inatedj .', u fa.': f tre .-ldIer m.m, r s.

Ther'e has :-f c- 3'ur :- es n s.-.n: :r. rng:. Tl.e [ ri :Fle: .'go -ern-

R.sental accituLrn tina as r-:.r-'.in ed L. the Offi' a p'-.'- i ..t

have -.Irad .ll'. .'._.-e5 frr-, er- ral rul cc.- tEne fi :' i

Syste,' to rules f.rL -In iar lil r-c:.-.rtin mi-,':. .-_I'i -1

arcount.si, n h p _: 3 n.- -:1:-. t.' ,f r.e.3 ec ir n ..Irln th.l t i
accouinting, the t;-_n :-.1s rs'T firr'.e.3 : iru -r-'inal zr:c.3 :.n:

,f ainl,- bl h 'c- t tr c r.t ,[ :r. t i on :,rf ,jriqu j.;t i l :cI -re-

ccLiFpticr. "ir.at rc;rpo r rt ;nj u], ;r .- ir in ir nl'.' s t

forrch t. fni n nj Fir: r p io in r.Fid F.ar rniEcir. problcm r -. .

:uch as i.nj-rerrm d~ebt .nd rinrcrfund ti i i.tli:. Tie net

effect. .:f the ? .Assciacion' recor-rndiarion his bt-re to

jrajualli in,.reas- the differerntiiaton t-it.-cn the financial

r.er;tin-; in public .and p[: tiac or .ani :tliol.

Cl-.: rIEP I I

CJP JNT L --- . :. l.:'l :T ..0 ,:,..l; T : : LITi FL'.UP.E

iuririn th-- latt: tlia i rr.f 3 L* LI a. rt r iicn iii; t-in

toirrn-iJ to the fcr jlation f i; :.f et : f pri c.i 1- tiAt if -.'.ed

S.,uli irn r:- fr'inar, l rep:rtin T it,: ir L': e : .ie i i 1

o r-,sri.t _cn, h'n e a Inq'g d in r ,CrL p-r grLa-Tim Jl dire,'t:il

r. :rm uls tin? a.cc,.- irnt in i p :- 1 t'i:tr ..:. i bl .: .- .t r-

.l r: : C .t- J. Thir ch.lpC-r re. -a the Ti ]:'" uL i a ri.r =

- s _'- ; n t rie 1 3 a t e r, i ari %- d : 1 i- i th -i o r.ii !-_ t .,.

i 1 .' '-" Tir "in r i l i-:: c- t.h ii 3an -'. cc r. i r-:in g pr ir: i s.

":.- aricu- ajthr-s l .-. atr. .l .dJ thi prLl .in arei in nu-il-,rr

if di f rer L a s h, i"e a '.rlr"e e a t ari rin ,i:ri ; -i lii ,... 3r.-.j

:.r-nlre j dif-nrin ~ dej re;i s ez :.f A perC- al fr.,- pi r ..ir: ,p .

I- re.i -e'.'_ng tlhe rj3 r piutil11 ati 1 ion thie ,'rI.ttr r l Z r, t Ci;nll

sttr LULrt tc s mil ri tiiir finjiniG Vic to [-r.:'idJ3 ,.utJ:ri: nt

ba :'.;:,r- urnd ,in eacn studJ, sC. tihat it :anr pr;o- rly b 1 .alu3'te

in rea atu *,:t its .:.lntrit.ution tO prcble m E Olutiorn.

Th-i first ',r':, tc t- re'.i '.,ei the 1 !t-..-st putlicati.:l

cf triC. [.jZti.n ral 'o::-..-|itt n nme.; rier.t.al r '..: unt in t I 'I :"9

th- :I.J lonal C:rum, tr.t F i:- J-:J rrr--'- .rl,*- t:.1 :'oluritli.: .-'d %it -r. ,

an'i Fi an- i: l r:-or.n ri 5ur anal '. -. h-r '. u- t r i I t. e

IT. i Cr.n: ittn. on: G''. i nm'riita] ic l'.ir Lt ng, Gt-'.?riF n-
tal .cco jr:tr, ,'.ui iti L q, 3rj t itn : l rcL in, (ClI..- ao.-,
i- ii' pal Fp inar,.. Offi- r r: .r s.; ati r., 1 .1,.
4 5;


e..: iin acsl ti s 5tartT ir the Fr.; i ..I cTi.C.sr, -f r .a jNatjionr al

.. -Il.r.. : r:if :rt .:s t a ~i i nii s tan iarjd of Jlc '


TVi-, jTmeri:arI Ac':.-':unt rn .':-. a ciati n t'.o r elated

publication ..4ri.,- d.- *: L-". c .*.jn al,-Jt atl r in .his u'. T;e

first i a i'j pu.llicati nr, :-. Stat m-.-tt f Easi- .-. -' ntir~

i h ry. In tri: ral Il :7 n 1 r -.:- h corn' itt'- or th:

.s-..ci ati on d t rc i] n, d s;andJar.ds focr jc..oj,.in. i fori action

"-r :i ra.i l r :-s f r Ir.-iUrila tinr inf r t L- I .r. Upr,. complot tio

. .: .i ort-, rr t'L en Zt:ar ed Iy ancthe: r :tud'y group

c. 5.'aluate a : n c tin, pj aCtic t s nt r:.L-fr.r-r.t if c jr ani za-ions

"t ::.c' le.-eJ a-il pulul -hE..3 i I. 1 .

ir. 1l a rc .earcrn tu'y : jrmplct ed L" t-he .'.,eric.an

1. Ltte fii rtt liI Fucit jritants R hi. in .eln-e Lried

7r:lly accrteJ" acc.-jntii. principals in burine:s enter-

*.i'lseS. tis rrt: pr :baS i, l t.-e rr t complete listing

c;r.il-ed t jdati D pr nz-pile, of ,I'iat ra-.ctitioners consider

---rln: :-.:Ciunti .n ;l:- atcin, A Statem-nt of Basic
AC:jurjtl.ig ITnery i L'-. ,n, I llin.ri. .'eric:an .A:c hunting
-a.Soc Lati.rnr, 19 .

'.;n-ri cal Ac ic Jrnting :-.s'ajation CComrittee on Acc huntingg
9ractiLc:. f Ilat-frr-rPrift rtg art: 1atins*, reportt on the Con-
.-ittSe- of" :-.-cntin: Pr 3.:ics of liot-for-'?rfit ('rg3nl-ations,"
c.:ountinq PTa,.iw t :.'L'JI Su .i.pi e ent. i'971), pp. 83-162.

PPaul .'.rady, Inr.entory of Generally Acci-ited Accounting
Prr.n;ples for uasnE.. Lriepr.riscs," Accoantinq research Study
I:,. ie.; \a ri.: .j nmic3n [nstituict of Cerc ircl Public
.'.*.' .t: r: nt-. 1965).


q'.od pra tice in '",. e rir sectr 'i,- :r-rtr st : C.t cnri

th r d t h t o: a E the Ih:tc3L ral t ,iTmi ~t-r., ii F[ r t l., :t -a r'

nort *jrth;.

ihe final mao. r .rkr t:. rb =. i, ,d 1 a sEcujd L,

TiErrso3n liernr a Baylor Fr.:rezAf i r. This ii mai.j.r sr.ud

.h,-, -a [-.pr -.atel.: f i r, 3r,--. 3. T-?e tul]:' L pa .t 1 1 .ed ry

Injia.na UiJi" r it" in I. 1'65 i. I .t incea.-Ae.. t.o .r-.. t 5

re.'e.: and onallysi of financial r:p.ortin i r.r:oCLmi -. rn n-

. :'t *2:-rg .-[i:ati:n3s.

ur:. U Iar irnal i i r re:I nt:d at tI .L i t Ci chl Er

t3 -'- ild2 a r.i.'c :f si nificant [p-.int r;d suir la an.d r -

1-5 -rtI'oidolc, S arj findin.i. .

Gc-.-rn-lr.tal .'.::Jnr, tir Ai.ud ti g i ? inan.- ial Fe[..:.rti .1

rThn i _: uL I .ac .r, : ri l. ni llY' tarte. : t t :. ,- r, ..i -,pd r..

o rn. a I:aticr, ai CnruTmIttc '.: 3 '.l .. :Iic*ii .-.cLi *:. ll'J r'n '-1 a

Z:--joJnti.g ar, ..ud tiring I -', t a.. iU.t.1 -a't.i .' E. .j-n arj

Class ifcar.i n of !Iuniipr. al AccouLntr-. Tre f l eiff:rir pri:"

much morc time cron'umTiirig aijd 'i a:cre- cmrnprehe1rns,-' than

arty:jinall bannedd.

In pre.'i.us flatlonal C:miiittei efforts a .taff n imber of

-he iunii -i-Cal tFnar.c Off:er .-..Sociati:n had rre :r aLe Jdraftt -

in, this 2f. fc.i-t t;,o ur, i .'e' it o Te:: z-r fce.3--.r L;nr. 3.

Andars3n air Frn}l: L. Cra. cn, 'n c. a -a tTh pi_']er. c- n p Js ntS.

5Ineracn li nl:., L.:-'?ulntlit f r Nprl.r r fit i.rnari, at '.r i :
.A L.-lorator.- Ctud Itl Tmir'ao., Tn.jiana: Indiara ini '.s -i t
Bursau of uslinre Rese:a-' f Craduatr c. :t [,Li FIs,
196S1 .

"r'':.., n r -ed = -onCl-t ri : c.n t-r F t rt ,=, f r. -h pr: ]e:tL

1 :h in ".l'-:i t '.'L 2 io. L.-.i. : .'jur tin r TL -lri. clS and

piractl_.:es. A.rlders3n .:.r.jic td tre rcri-inrlier jf rthe rese-rch

ajrj prcpar-d rie- riJr r.al ani re'.'1 = cr.afts.

As in pre .'lju Iz is-j.ial C.irLmir tee puL.l.icatcn efforLt ,

aC.vis'ry *t*arnni ttes er- i'r.rrind Ut m.aji.r nrtianil ac :.cntina

i 1:.'-i.*r ientriA Jrari:.atin.Dn the ri; rmarn *:,f a -i. [ ad.'i.-ory

*:.- e ut-. --E au i .' t ri.:e. : e mem cber *tf th. Iati.:-ial

C r:.-' t -' a n GCj' rr[ra-r.L l ".c tir. .'; ir. .r-e lju efforts

. :r : ; i i. : "; ,:,f r:-,.- ,i it Ic l C ,rmT ri tee re p re sen t'

: .-i. r '. .rnm .nta :iu orff e- rs.

T.-Ic a 'i r.' ---c-i-c.tee er- -.d s c .a s ur.adln g --r f D

:-nsu'jt.-nr dri t.. "C:nri ,icr bilc draft natere-i l as

S .' : -,.ers *:.f thi n.-itte I ti.-,al Ccr-,ii ee .arid

-- :crl -r1 '.'ri .i. :.: itteLrcS? .;:li' uni.tt:j aluzoie :Dmmients

;-.-: .. :- 5-I r duriri tn: cc.c rs :e fc t Ln .' rC l:'. ri proCIc t.r c

,r- nrore:t the follD.'inr r ;-a rd ri, AICP.A part : ipa tisn:

'!ot an!'' ,id the :-hairman of tli A;j-erican Institute
of *e-rtified Putlic Ac:ccioun ,nts .. .'iL-,or Cc.nmiLtt
part. i.:iate in ite deiliber tlon? of ti'- 'ati.:nal Com-
..ittee, hut t''o oj ris cuonelittenc members werre
coniFletel, irn.'ai,') e aJt ali tiunes.7

"I;U tic:n il Co,:n- ttc. n i C.:'.v r. renr.t Acc7.ourln t ir. -overrn-

Jj1 Fcph Lo'er "3c..rnncncal ..- :u-tirq, Auditing
did .";ianc ala Paeport ng ." :1-.nlht pal F'. n.c .L (F'bruar.,
7 .i F. .1 14

Th& in ral ar -"_ tas apr.c ro.- :.riy ; 1-' Ll- r. E- TJri

Ccr.t.iL tee, ha. s cr, rnd riot- t.f:' nt ire flftr en-n sr

National Co'miittc Th Le.'rC u,t -i L L t- c o si t i o f:

Josephn L:%j.r; Eirnst ar,:i ErrSt tniiaa er 5ar,
forr r 1-30 y ri-AJ .au itor-Contrc.t .ll r af
Lo .Angetle Cucnr.t

Joscp, Cunr.r3nr l-i.T f.r-.ier- First D.put ,
C.n r-troll r of the City --f e i '. .ori:

7. L2ro/ .'artrin iiorth.;:Srcrn irinr-.rsity

Lrj -er had ser";d .n the L -Cut'r C -r'mit ft5t sr tr-e 19'51l pFit-

1 a. or;, eff.rr All :f th- E. .:ut .; C.:ilrItt, e r- 1 11

C ','' ' ; rs 1:1, ai'd iiac is rq3 cE: rin Jr :, ,ia.e .. itL tr.:

S-.- : .i 1 inr,-.*se ff-cr. s;u. = ir nt n i ubiL._t i; L~ r. ft ff c.;

irn Frubl i :atsti ri n lJ l=..rL j i 1 n fin l f;.i ,-= a e 1

.- i .:111y n ror ed D/ the seic.- r or .rani Zati ll I.- AICPF

J.c:sa the f.?lc'i n in ar ec, t.ri l:

S-'.'eCral rCmbt rs- hsa-e 3ask3 '.hetL-t r the ,'er iCtj
Institute -of CPAs hls endors-d .j-i n-'e,. rublidts h r..
Teiir irnuLjir' are ta;edJ .r, the ft t ftht an AICPA
advisory corrmittee is listed amr.ng tie msan, ad"irory
cornittees ihich a=sisted in the preparation of to.
boo-k by re-"ie Inc draft mateir'il anra *.tfrir, 3ug-
-eStions. The assl;tairce ai.'es tc t'-e rjticnal CDi.-
mittee do-s nc' c.on'titu-: ani official erd.soriemenrt
of the too..7. b, the Institute- TIhe sad-.i2:.r.; C-r.i-iLts
mtede numerous suggestion I-, rs,~e or :..:ich r
*:,.ccrptcd n-d sooml rc-iccetj. Th-ie C.-iruittse did not
take a position on t~-c f_,al Jo Jiicntr, Llur :13-
pur-ly ad" r:' .;

S Edil i.. -I 1 JoullT ofi .' ,c:'.iu ri n .....I I.i .li I 6'i 1,
p, 67.


[,- 19 3 prJ ':. 11 i: rL :rias : i n j s er.au L1 iff rc t in f rr-

n1 t frm r .*5r : 1:u ti,;' alc i C- mnii e : f:r rir'. -efpar a t-

: rnE-t r a deVo.*t t: i -....E rrnL reri l 5 ia 1 z; ur,: 1 g prir. i:pl .

Trai FrinciFle h i5 att.-d n.nd tni ex
pr."-.,1de- ft.r *cliar i caz.ticn. separate Chspters .-ere d-e-"'ted

to is:h furnd 'ir. h aiicle n tries arid finan:ill statement

- ro-'d I. ,Indl v.'lid'l c ha?.er al -er- in- ci rnc ed cn financial

r=:.- r irng. a ri. stir. al ttiles S rid aujiiting ..f g rc..rrnentdal

-i-.. "*d .apz-.n.jr1 incluj.j 3:;.ctionr n t r rinro :o .' cla'si-

f. -, -f c.-tc u.At a d 1 1usii rat o. i rer:,3Turi: r

TI i 9'! :;alicati.on rar i lit.:sto ft-urterc pr in,.: pl.. and

S:..- r : .ur- Tne 1 3. pub1i at r lfiIL ct irL-rin Bas- t

.- : s." ir :i pl r dsfLi.n i a

p i.rifc fijrilanert.l -.nits '.' nli on the bj = of
r:iasnr, dj-r.r, atr ter .3Erftormrannce, and general
:-':cptanc:; L Fpubil c ac1rnis trat ons a-:.jontant-s,
nd "th rs c ranc rnd- r ] '..irti- public finracial opF-rat ion,
a:e enerall. recoz.r.i ..- as. being 5es cntlial tO
c cr:. t sinaly'i= of f 1i -racial c-,eration and to the
proper rapacr-tit r, air. presentation of required
fin.ancil statemerts and re.ports.

Tmi stud alsl stat-i thtr.

Ir!i ci 'pr nciple' as Js-d here 'itLh s u -st arti al .
t',. sre n r in anj ir. t sI- ai 5r;:ns' tii:.t it nad
sn uscd ot" ii.: riati:rn, l roJijttee C' On-jio, fE.r
a.ccounti!q strncard= in cIll eCs ano uni.'ersiti s. 10

l s=:,L "-i-l '*olllruitrt : n r ,-jvern.r -r.tal .:.cc-untirg. Go r. n-
: .tiO c i .inq 3 3

l2 ., p. 3.

Tnr. c.-r, iltant .nr, L pr i .-i: i er Ft r ..-.i,r ,'ra,1.:d.n -

alo Eujl.Iqt OCff-.-er r f thne Lr 1-.e-. itL f ie. j 2 ;'--:ic=.,, ,-

ri? .r ic.ntr .i. :1 t rL t surPrisLri T7h r f rf-l ic pr-:.- 1. .j

d'l.s l I lct to s2nid iTmi.ruih i grLht nr tl-he i.ar.a ri n f? .r "p. Li'c ipip"

aI tnie' ie nt r it t:, bc 7T.,nrstrue.._

CO.i-qge: ani1 -nin erasitis ar-e n,.r-profit :. rg n ,r i-
t :.n It is se.-tit 1 tl carr.f :.r that rl-, r.
u p their Crujd t: rnair,n ain their a.sc :.urtz i n1i
presrnt thenr Linai-cial r p"rt. 5 in ac-rian :
*i i-.l .- rall^' aTcrpt d :d acc untir.qa princ.i. Lee
s3u r.:orj i a t. n.:.r,nrcof.t trnt- r Ci.r .1 i

T''- prir, 7i[ L -t fOe th in tlh' I' ? st-u.i are- 11. ; c._'

-r. :'.e ri. lr.' in'. p- -s anr a' .SITriTIa r':5 :i ir, ,.*i.p ri.,: ilL.

'T.' f'r.t t'.:. r.i.ir. le-FI s of th-A l .,6.? r. ud* 2crr-; rt.,

: ty cf *: 1-a1 c i i t .n r. a a n l. .- ri 3I I, a requirre P 'Lt*,

_.- .,r !:ril 3 ar- ur-ch:'7 f s i ch1 l.64 1 1 .-r~. jr,.i

T:'.Ld~. .a Erm e ..-rl ,t r a r. for t ne rcri, ri nd:r ,-f tl. ".t.

. il r pr ir.: p.le re-Cno,: s Cn .e -r, *g,'.'rntnme-. unit a..1 :p

: b'.ifqg t- f.-r c.,-.rtr .l. p.rpo,'a -," r nCral .J-y.' rr,,n r -.':p-r.ji-

tures aid r-.,i-lue:. The empn'h p as is rlar-c d rn :rn- trol rather

train Ilanrnrn .-.i n r 'e:,rarel t *l ii a dp f .r a tart cul ar

type of budget sd:-h as p-erorrarie; :r pro-3lm t: p bu.igets.

The-.t ?96 p j lic t l r str.Sc - i nT.- g r atlct IC- f tLh- L.bu-Jdg t .an.

firancis. a- ;.-:.i:-s.. rnj tm tnr--i.rar. an l:. b a-.at: -s i -

jourr.al cn ri- ii.

1 .:itional :.,rn-,i ttt n tL rL: Frepairat cr of j rl.ir.. i i.r
ColleOca and Unr-.rezitt :ui -n.: .-mriii.rartin, Colie;:; ai
University Eu'-i n s -3rLri L -t lti n, i lhs-, t cton : i:.jtlo 1al
Coruncii on E l c.ai aDr, 1'.52i F 1:..

F,-DJr r in,;iple in r n, i1 R Jtllc l'. L'L-, r.; lat-e t ir.ipl -

imei c a,:-i -r, of f .nd 3ic.Dc;-jnt ing. Ch,. *ha.ng- frrc- pr='.' uj

;:Uri j.:at :l-i ar i'. nino -such 5 chana'ing Lh- n ri, -.f e'. ral

funji a.c-o'jnts. The prin: ic l relatili t. r- 7.or ding of

:jr=,,cit :'r n fi -.ed assets .a ; also, r-li t .v ;' u- chJ inged.

l.:thir thL 5sairc :rani:anita-. io, :prErclan n ret-ia-.endeJ f .r

-:ir i- fJr. anj no.t for ot.-Le Tle -iii~ t''pC o: .i.T',li* L :-u

3-a'.J *,: t-a.-n in r gjatrd t,:. tl-. ba ail s .f ,rc rrjncin A more

3i ri, i -,l ,'i z c-f i hi- tui:. pr blcm 'cr rca i _a r K 'nI up in

a-i rec.:.,T-, rd.jj fariiit of fina c,: a I .-. t er-n-ta do s ro.t

i jL- Lz t -n l all from Lr.'..ie of pre ij Ja '--rni tt=e rCe i:.r.an-

:i- :rn Ir. : l[ nall. I he flour a33ai: t3t."'iSnt:' reCltrR enlr .d

In a'Jitirn L the "PL ji: 'rinrrcile I.-i fre -.ec-ific-

--. ,,r 3 r in th,- r bi ration, the 1 .P9S lDbl icati.Crn also

'leit to a le5 .. ell def r-d Fz c.f c:ncer.r. p con.'entiona,

"a.t ics, an-Ji ra.-c. Jij' a .ppllicablie to pri .atr. buJines- enter-

-r_.r ".'11I- are u t li e. .-i ',:. **=.rni~:n ac:c untinl3. Tc lists

in cni ct do'ub'e entr'y too.kk-epin3, consistLndly otje.ctivity,

c r., full di3.i,-r.:, ratit Llailt,, and ,cin-er.-tia-.

c,1'i .n._ ,concept, "c:Dr isLtan- ," 1i defined.

C.-n-i-tc.nicy r.,rinir.ie 1 o-lds tht.L tih a2c-untinf
fr'.1 ar eco-.or.i e rIniL r l.e s -jt be ccu:- itern
o i" c:A in :ujstance 1s to i ro 'ic n i;a v:emurI

: -iT .ir t.-1 l ..f r.s.lt- f r t '. o r ._ .r f .-', l

rT'i \'rtr i a; n: ;c n ati- rj fi: ji. r- : i an e

ar salr, is or :' itici n -..cf tr. i .:'.r r '.-r. nalr.urr .r r-

dIvi o: :c.T E i-cn, n p. e aFpr*'.'al I t-y' Sti:ru'. r -. 5Ep2Fr.

t; I. f1e an, critic :1sii.

Th .--it;' di. c:l. red in d~ term lin ri "tr..a L :* ,r 1 ir. l "

r. not scl ,d nii- Ir. rt1- st~.- d ,. f inter- l ai :-j :ul- i

c-:in ;;l- c-C.joi rTn ari .IJ j Ic .:n :I: a i i ..I .: *-r.imil ;tt i -

r :**i:-' [' r not ,j'jl r .. I ul-r i ri n .-

3...- r -" .-:: in.rt r t. [I, li L -I l bL.*rc. L: -L n; L3 e,- I r. '.- j t

-z -. 3 -i -pr .incirl- a," n 3r '. h t - I'. n r r

: --.- .'r. F-pirr l r :3 td1 .' .f 3 :tuJ raC tCLi: ...j .1 i.

I- .: .:n Ij nfr m ", i I II'r.c- l tr c LI n-t, t :. **.:l i r t3 l r :

S. =rIE cnt ~-'In r:- -nr _-L E L a '_as- a -lJ-r 'a r'.- ll"! r, O re :-,riJLr,--
-f re. lu I t'Ll-r.al CoruI i t.L t [-ut.l 7 tLl. r 3.

S Stat-ient *f E :L A.:'oirit rir h.:"'r.
Acc uni in] for F[lt-Lfoi -PrDEit Or-'ani, atr4-1:

Iro.i .ne mid I, 31is t30 r.:. .nl' tnr 19' 0s, th-- .'nrirl,-r

Accourntirn a- i- LIoin iSu- :serie-s f publcatil,.n r: '31irtg

t acc.ur.tu in3 p.rincicPle -. Th *:~ncr ail appi'3ac- C the ff-:reL

was to c-tabii mh "jrcad uL-n princ; ile u'p.in hr i-- tc. ts-'

corpor, r. iranriail 3 ta .,m r -it li, ', ] .uld i ; n[; oli-n r3 tut m.'.nc.l

Iz lati, n Ca .,: i t t c :.n .'.- rir i t . un t ] r.- -
mcetnl Accoining p. 3.

;.uf f rien: Lniform .T :'J, -rin r tanr, ab Cl tc j'.':tif; opinions

r ar3 --in tlhe finan-ial ac.-n r i, :-n af the firm.

in 1364 the assoclj at 'in emnDaL j ci Ir 3 11..' i sarca,- pro-

grai: "Btii'liine4 the 'seriesE' inar~ciuratjd witn the 1936 state-

mrent had serv'.'d its purp -c and that the tirm lhad come n for the

.~is..ciation, t? under Ct ae a r- arnd different iind .f ffcrt."13

TIe i ..'cu ti'. Coi .i. ttee 5f th'e ;.. : c iati t i n picked a

(-cjr.--i te ? : nn n i ilg t e -.u-La t: r and nc- pr j titic ner In

'19j they' .-:r.pltd and pubilisd r Statmnernt .f 2a-sic 'ccount-

i T. -:',r r

Inc ch-ar- 3- 71 -rn --. tne CorMitTr.e r d been tL

S. d' el-. an inte rat_-- itat smenC t of basic
acc--ount i g theory' lrh :11 il .r"-c as 3 .:uide
tc ed.crat-rs practitl.nera, and c-thlers in'ter-
e.-ti- -n J:-o.'unting. Tl-.e :.tateme.'t ahou.i
include ajsc. -atr sup[p-.:rt for ain; os tic-n Laltrn
and sufficient [-plar3at in to pr' ij: clarity,
yet .t J:. ic,.n.- e 3a fea.si le 1

The idis. a3r c:ani :pt3 incorporated by the Committee in

cneir statement are .-.n tri w:l'iole readily tracrablc to accounting

lit-:raturc. i.'ht the Coinr'itte.e proposed, ho'.%e,.er. differs

..'idel front coincn practice: "[Thej document is a revolutionary

j-e '.icn its cnrtents are c:rmpared to contemporary practice and

Lt'u :at ic. n. ,5

1Pobcrt Stealinq ".A Satdment of Pasic Accounting
i.,-o.-,-: A Review Artic1c," Journal of Acouintina Research, V
i, ring, 1967), p. 95.

'In- '--rnm itttcce :j;ptEc a *.Ieiai :r.. e i-r, :...i.1lt.: app.:I rt

as p*.-.:.ai t.:. the prt'. e icu 2' I r leiei lrIndL.ctr?'. ._..t Ciichr C -;

mithoJn EL ernti:,I.ly they re:- ar:'e the furc : cir, if tlriE r, E3

prescripti,.'e ritrher than dJe :r pt,'.-. T-i- Mppr.-.,:r .. n

3UtJth-rr statt3 .'a

d-i iaTr etr ic:'I 1' *pp s'ed t, ri .: P3 ot r,-Littlet.:,n .lith I
f '.' 5"i.; L.-:.-g other -JrLinrt ,prrE tl:e s inti a :5 -
hr' .nt n: l. ani t: 'lraji': neth.:. -f ir,'.'encfii r,
current rrs tl : ar.ji tncer ]IJ itlr ir tcriem.l

This ...Tui ttee jefrte. a-c:'jntirn, as- tre. p3.sa :e ;t

ic. L i 'iLng rea urinr aa d *: un :a r i a c i n or -n-i: intfr.l'riaLi:.

to p -rrit infr.lr d j udgJm.ar, t e anrj ..dea r c t.i' 'ij4u of t e

1 a: .-a t o '- i Ta :tader efL riria., t.r. tr L: a-

*.A^ ional o rf erins .'c.untrini infirr.r tiocn L..as 'r .t t. L

1 --: d t-i tranitd a:Llor. j3 1 but .3a to -r.conp.sS "a.:.u tp.

: .- :..- tran a.:t on d ata a: w '. ll [ .e CO ,m -,tt--- at l .- .3- r.-i t

1'-*I t-h.ir concept t z pti.' ..f -or it. ented Or y nl r t i 'but 3al-I.

r thhe a ti.'itie ; if indi"v ida1 f iduC ari-:. ..'-"ernr-eC rl

units, charitatle enterpriEsZ, anJ sif ilar enititie.

T:ia Corrgnittee in fc.rmnul r.nq trLlr "theory" 'Enr.e tl-hrough

3 namDer cf steps After Jefinirnq acc'cujntin, te "OC'.tlcct.'r:s

*jf AccoJntinq" ';ere deterinr,* e.

17A -r.ican d Acco ,unt.n i .s oZ-'.tir :, r3 -, l'-or p. 1.

7:!-D Ln .;CCt'-Si. f *itsi-uninD arE tr. Fro.'lie infir-
mati-n for rh.. f.11:. irg pjrp- -e :

1. R!,r.r: d3e.1isrns :oncerrnin the u-l :f
Sin,tej r e-lour s. In.' I lulinia the i id- nt i-
ficjti-..rA :,f r-:- i : l ..:ci s it:rL ar:- nrid
d3te rmlinr.i cn .tf bj]ectti'.v-e anri go.al .
2. Ef[c. ctt-.l e .jir di :tir n. c'.rntroiii ng an
orjani1ztion hu iar anrd imat.rial rzs5urcci.
2. .aincitining ind repcFrtin. on the z:utc.dian-
-hl *-;, r':_-- rE s.
4. ra cilitatLina social con-ro ls and fjrri.nc:t s.

Ti'. C.~ril ltten then detervmind standards for accounting

:-.rn tiot : i "&11 as .u eliner focr co iruinic:atinq a.:.curcrcin

r- '. atlion. Thne criteria foir t.riniardl r 'a oed on Ltha

-n- _n iul a : riLe iron cf UL ful.rii s r 1l:1hi t 1 .hi Cc -,rI ittee De-

S- "- to,. 2 e -ral ra c: r, pt for thecr:' f[rrnl'la' jn. Tl-ih

:- iar3 rc : .min-iij.- d by th. :ommitte r2.-e e:

P nle'.'an:e 1I t'i-. criary Istan ard rnd r-'quir- th at
irnf.rm iatirLin mrrust bear c-,.:.n or a et uj-eful a33o .ia t
in:- actions it i = je ign-e- toi icillLate -,r results
ie irei: t~. b- ..r,. a uce.. rI'r-o'.'rn r azut-m d Inf.Orma-
ti onil n-t e1 of potenti.;l u- s.:r are of paramount
imprint nr n in :Fpl ingt tr.i starjiard.
.'rirf.ia lit require that :scrintiall- irila.r
me isurL-s or c.ncluions .-culad e- ce-a.:h-e if t.-'o
or m.,r.-: qualitled Fers;.n*s e:aiined the eaneJ d3ta.
it .us minrnrt auie ac.:suntin.; information is
;coernl, used L., pers-._n.t lio ha'.e limited access. to
the data. 'he 1 s the p[rox :mit t to the data, tne
r.:te.;r the desirable degree of verifiabilit;l be-
-c-m'= '.'er/1ilaL'.lit, i- also important .-s aui-
ius~r of jccouru ti.n Infor=aiition ionctimc. h'.'e
3 p.po-ir3n j nt r,--r 3ts .
Freedom froir bias mi anr t.-.t f.at, a.'I Lieenr
irM'..n t L ai. de6 t=r r mirf and reported. It alo.
[,'a-, : a hat t t-..n i Iu a used in *ide-elo'ing *Jat

1 ij

should oe f ree .:.f build t-ir bl, .. .Ei sa- in fo.rm,-
tiot. ,ra': ti quite uLi-fiiul rand r.-irable ncernaily
L.It Lt 1;: ratl,1.' .:-c c able f. r e.:.ternl r c-* r.;.- .

Quanr i l fl.:i l lz ll rel -a -c. ct he asL-; I r r.-.inrt of nruiif-
brLs to t-ie inf .rrnmacti n be r,i r ic rtt-. lo.n i
the mo'st cc-.umr 'ri b.ut rnc. t o*nl; qua3nti tativ
nra: sure u s d t '' ac .;l.untjanr. WhI n ac o 3 '-ntar t
presnt n rn-qu antitalti info.rmratior in .--rnplFl rn:-
'ith the *.thtr :tanidards th-e' -.uld nrot imply its
rf.ai i-= rabil i _.': Cor,. =r :' tti qEri ,.L)ant_,?ar.r '.',_.
Informan.-n is rc-prr.ed ..ithcou' .a c.av-at th.
accountant u't a -Lume I -r. tr. i 1 . _,' for I
m auur at il t .2u

The stanJar.J-3_r 'Il' t:- s5 r'. "a yard :cI. -' ai in-.t

:..W i.:h c-urr rent pr;cti- ciouij l t: mc'ai urd ;o --mi t r c,:,:;.n- r ac -

t- .:. f .r r lt'. r,-r ,t C..j bt t.: ad h: Co rii t.L: :il c. :

z.: ,delrn:- f.,.r C:7- ri-m; A -. t i c aid
f. --. -. id l ino- fr rii-, -,D; -: -lT. :.'I"i.-'-, the?'.' S id '-' i

S:.;-: ant ,Lit I -; fiunrJaiier.tal thsan t, in r rd

1 .:. prc, .r la f:rf, 1E E C ,o " -pF .-r u .
2. Di :0sur' f L;g nifgr i4nt r=litionr hip .
2. n.-r. Ic usi or.of e n"i'r.:rrental inform Tat 1-n.
4. .. uni formity .:'f practice *.itLhrn ani -uorin
Entit.'LcE .
5. Corjl-stenrcy of Fpr aic thl-ro'ugh tirne.

Th7e Co.'t,ui'tte- th n 1l1lut'rar.ed ho..' r'h-e standJ5rds shouldd

be appli r for financial reporting. Of particular interej-t 13

the chatter orn eternal us-r_. The '-cmmitt-e nr ot'd that i1-

though cxternsl users ---f finan:ali tatLt:.-rinta are a "h-ter.-

gecn ous groupp" w/ith ran' .ar. inc interests i-. Is pos') ibLA LC

It liad


:1 :.. l:. t j.f.-ir cant .acc..unt in: iri rrm tior, :n l'i.:.ugih i 2l

pr .C1 3 a'1* t;. i: r-cl C' of the usErs ari Ci..t .* n:'r. r .Tnf

thi: [rrim r'- u-e o f finilncii sta-tement- L ; &x terrna i uter

tl' r.y r derit f 1ed

la) prjlicLin- earnin-s jf a firm fhr a fJtiure
F ri i:J,
(b) r-iicting fuJturL firian'-i l pF.sitl-in and
d, .t t- pn ir.ng Pn-.F . r ,
1:1 L.ro -:Liin rL.ina rent f f.:ctri'..r. inr
f iitu r. p ri .: = ,
jil 1 ,':-c :.-i ir.3 for aic...ri.. re jD rcE- ntruizc.-
ly :'- -rper .:.r or n i- .' c. ain.:.tr -r.

ri -f t:i r ,-_ alf. -, r reC ci'un f'isi.o1'tL.:) r, f t11i

.r--7 r t: ii -.: r *.e 1i rar i r pi rLl r f.cr t.:.i rn : ra Ers
,'_l:-_.-,. *- <-..j 1 yD ir,,r.:, :'irii iAl r.,;F:.L'tIrin fo/r .,:ternil 'rierS

: '. ugg t i.-at Tljrr_ ,t- ,:c:s i.riformation '35 'ell as

i*- a -,c*: t. irif:rn ti'n bi i..In ud- throLiin use vf multi-

r --r t iteii int=.

':triti.-ir: i jf ti'?. puL-.l ic -tion aencrall'. fell into tvo

c%-te. r r i trie Frac tical 5 1 oi t lins r Of iii i alenr',i rtatloni ani dJ.cu-

IT-.i.cat .n, ar.d the rae th:djollg.:' the tu d '. .-r.mon tIc

" r;ctl .: l prot lem," iri-rntl ni d rha e be n: c:.-t ,:.f sbtainin:

ch! a3.dition.-l daLa, interplay eit-.een standard=, h.- -itancy

f .rinan.!3ir.*-rt to re-..cal ccnfiientill information, arnd tne

Jubicti" natur- of th ;Lstna;.sris.

-crptin, fur discu ion 'ne Esoundn-sI of tlhe ro-
o,- atLru:tur oinae ri-., nevertheles- re:di foresee
3.-rllU jdilffic.lti- in .uctirn it intoC u2. -

"Ernest L. Hiclh, "Cori7.mncrL 9a 17 Statemrnt of Basic
.A:countirng Thcor.," Journal o-f .'.-,untanc:', C.;:III (September,
I,,..n p. 33.

L'ricui. n- i n t nE tkheor t .:- I. : i- l g iera1 ~ 1 r:iac.i i-:.

th.- E~e. : n :' f C pl i:lt ne- anrj -er u.r i".: 'I u i iirit. E ...r

-::aJ.im l terl ir n t c .- i rr-t;.a I.- ii thit th- Co-ii'nI tct:c i-j

inci iudn ']-f inti.ci1 Dr o accur, tinj ~ nd d..Ju-t '.e r-ia.ni-,.g,

toth o: %rhic- ars radJcal charj3e .. *..lth.,t 3Uiti fia .io

rcr cith-r."23

it is difficult t. jud:.e i.. th.: s.tat .ent :iill f e 'n

upgradir.3 mjounig d.j tJ,.-: tion. Ti" rzcer:rh gror3up f t-he

a Z I- i an Chart-L iJ A:cuntant n-:t.;J .-. '.',.r l 3 e r; aftr-r itE

' c .1- Ca t IG

i . li tti. ''i-:n :. t" t th:- st--i c at ir.rc ra=

rf 35-ianl 1 r', untnr criqr. l-it .3, b, mrTir _r
f ln: -r: o-.-r irE o ries: n. Erl.

Ti'e c i-ne:.-; Lin lni' Lit ee;'. tl- r; ,i ;, tipr cti: .; trn-

i .atij o of practice iri ; 5a::ountarts. e .rite-r [- -.rsonall

~ 1'.'.' cs the .--riiican .Acc,.:unting . jC action's ffort .ni.:.

d:j nr t tor. with thi pulc.uliation, .:ill *'.mer timre -r'" =i-

nizicaint impact on pFlrICtlE.

The --tri.j- rn cCnjLitif T .. ;Cciat i' E.:e- -uti e C iett1 -

after czjnpltiton o f .ttstem-nt of Bs ic ',cc'.ur tin4 Thear

est-als shed, in 1966, a C-:rquTiite ;.:-i ..:cn ic ntin iracti.- of

(IDt-foj -Profit *.*rar ni '3ati. Thi C:ru-i tt-. 1.3 *:har, d as

t r 10 1 G. a .

5 'ling t .'r .';. j. 9,I.

-rr'rradie ;iUlca. A. EtatTTaent of e.i1ic r::Luntri.
Thr-c.y," Can-didain Ctar-teri ,-c.-,.nntnt .CIII OctoLbr, I'1..,!
p. 2.7 .


I;. re -- .: .ur .tin; ::r ta:tn:D :*f r.:. -f.r -pr: i t
cr aLi,371Z ti-:-ns., t5. s -.i ir ,-iti r n tiih l r i r
.f t.'ie tar,. rd. a-. n.-:.rtir. irit rn, r i :.r. -sui-
a teteJ In c1 -- ' :.ac.- nt *: L : .::'nct-
irg reIn r:,., anj t.:. ;4 L :hjrin e 'I :,' m 't
c:-.r'. .Es ar j. f r i r tcrL r inpr.,. s irint Ir, t er
form 3jnJ .:irnc. .f re p :.it c '- tr f,: t in-c..frn l and
exr:-Ernil ir. i _': atl i in tr- 1i9' I .

Ar rct'.'_. a c I .l b' '-j-aitt,* in rbLra O.F airth:.r lt 3 ti

St-::.m3nts f I t ir l 1' ie r tan j ird f t t : run rig q ni

S:: rrin fr n.c- f-r-pr:.fix. *:.r jar iz tii, .ns and a 'cncn i der-

3 i num'te r ..f ii F a<.r : -,niz ti n re^.irc (ITii re,.i .

S':1,0 :d *'. r..rrJ~ .-1.r.j .L." : u .aic i :i, .'-*.13i:l . Bra," F ,inarn : aia

F :: _ti ;. : Th: r -: iTm.ndit rs .f i .3 U 1 30c 1F'l. -i Coc i oris

Se jt.-:-:Ec- c_. a c.--.-Fara-i -e nal'a aini.J] p ctifi. t:.: ics

.* .* : 3 *.n i h -r.- i 'as1 -- .n 1:. e rate

_: -- il C : r r.7l ,: r i-r, T -'? i .r, i tte [* L.l.. _-'[i l -II l l r

: i re-c rt in 19"1.

"tie 2:.r,-lu i l-n f t~ I, :. -. iit:* u rn :.:mFl-t i.n jfi t eir

S. .rr.nt -ccoujntin and repForcrinl practices of
iioSrt ;;i F organl:ati-'ns 'eir. alrnoit e;.l i.'el]
'. :l v d f: i dri f caused u -,, 'Leg,.1. llt c ,..11lar
a.sc::Jnt -,ilit' for in3. 1 du:l fund cntitln- 3 3n a
;ye3r-ty-year b3asi : -ift-rn lac: 1ele' dance and freedcn,
fror: bras ani do r n t i.ja9iat;l flili the ol-h'.ct e "
a: .c..Cu'Jntlirng pr Fo:d in a tateman- of ba;3 c
A'" .- ,'r E l n. T h?>r.,. -i rL

Pr_-: ._rL- rcf ;c .'*-- '.- unr-. ,. l :-rg :|ia t iire *.A "..i;-t ;, n C'' Unt ing

Ib ., .

ir,.: CoDnuitt *: ai 3 ccrc. j.r j chac hill tI .l 1 i r '..

b t =,r d r .: f t if :i r m.ri -. v.:. r.t. r >fi[r.rn a-i1 ,

:h- T1lirilia t t that r :i-c ri.:"; b:in l:,r- el, ninir li : l .;'

tr cld tr,..:-1. IFP .or jri L z ticn= t! n edjd r n inf-.rr.-..rr tic.r *: r, rit ,

rro'.id dasa for Lc-tn fC.1inni-? i ir ct. in and cont :.i1 ,-'j I a

',ell a eC'.3 al 1.or- Of the utll 1za ti..n r sc rL' r -:'ur s.

Tace fi ..n.J n-: j t.i ,i-c'ro.'i d curri nt firin :n-i: rep :rt i.

-r-ctii :5 or mcTe.:' I F .r..r.r ; lc.n r prc.duc j oait ii : j,

r- n .ro'r :et or irade ucre f.D ,..a .i 3rI a i aI j C .'aiuj i :r.

pF r' ;-m a TUI; r. 'i nUT t;b.ii. h.t .J.ii :rinal .1 up F l:-.-.hc -r '.aat

cs : '.-ui. e -r. r tpi.crtC L t, i1 i: the;.e ihd:s. ihI fi n i r in

-i : c:L[.* r.J.d _..in- ii :p** ciri ,rt a, a .iaii,..ari id L. l. :

uJnd 'j i1i ji

a,'jrr, ni: : :,:ajinr.i n Li i"ujrrti,! pr a icet: a-E

c-'.ri'i- f-..u'se .J -( f'und acc, ii ri : i rij .lie ntl3 ar

tata em nti *:;r-ini nj ard co] ;n ol idating rh i-.f.:.r-

-natai-n rt-'.,rfI u t.:. -ie cr.lt; ; '.i a c-ih miur t '--

d e. eloped.

PJ3 tar'" Ac, acurrt in

Eudaetira' j:c ln t: in praciaca ha .. alnr-,3t

% clusi-.el:' L.e n v i to C tarit in.I c d i I r

*e-E. ni-.J -n .oL11i3at '.'rill jtn.: ciLL' ..ith act :'r,':r.

rt 'l J as -en tc. C:r, .'. r -,Dai L .- ::.unt t ilit for

L -a e -.ojuice i f Lh t cr.i-:t a s a '-i.l : D'.*' i

iorn r p r .c-od of tiai T:I e., r'-c.l~riI ndj; '1: lS

ijf Coi. --cas e.-l E ud t-t r,; d.ar. r. rlemiint ati ,ri t .'

?.:r-c j sttanaac.- :f nz rforr -'r a: .-d

.ti-dJ iri -_i q j --t c r, ci i-q4, an, a ,lr. :es .:.f

:,.-atr.I-.lL i c::tr; CJ a c : .' t rE;p:nri-- ti li c s.

The EPi i ,L A.C-:Curn tinr

Practicc refl ect thie effect; f i-j ll-t ic

fur, I .ndJ ou .ig tar, re ilir r.-rrit d -'aries

re:;.-mari.dj as a generi! a:' acc;.-Fp; i.ountina

prin.:IplE f.:.r 1;FP ,-r 9 ar :i ln .

2d .i -.; r.: -, ,

TII, c riuTi itc.- founI Il 1-.:n ---.d =se frecqu nt1 ,

r,.L Ca ital .11 thos;- thac .ere capitalizi-d

r* .r ,ftcr se r a-gatei in :c~.rar te a:::.urt grcupcs;

in thrat i ,s-cs reC. -:1 thr~ r .I ji ft, icnrati cs n,

:.r te..u: t I. r- frr-quentl y rt azc.rr3 :t-1 fir.

'..ih the .e.-ctptLin -fr hD:c itals ani -'ocm or ni1i-

:a it ln- .: f thei Fed.sral GS-..'ernnment, d.cprcciatiLon

a.ir- =enerall;- rn:.t siccurted f.:-r. There e cere inccn-

cist.-nt jand riad,--uat. hrandlinti :f long-lifE= i:setsi

at thrlic r di-spj-al. Tne; rec.:.irer,nie : fl:r.-d assets

from all sm. curc:.s :i.ould o r;e ord. -. E.pcrn.iLtur- s

;.r l:,n litf assists should t-e C3pit.al z- rather

thi:rn .p-ns-iJ. :..-c' -ptrl c d-ir.:tia:n tecblhnixu es

shl:.ild disclc-s= cost of uis or c-nsumption for all

assets. ['ispoal .-nd rctirernerit of lon- life asasts

..ould Le c--taeLI; acc.-unc.-ted afr.

I. 23 11 i t . 3

T.e .-,irrititt.i fuunrd loan cr-.3- s of ten r-il.-:

Sr:.enue, a3.J .Jeitt retlr-mi er. t t s a :xpenIJiturEa.

Li ab l il ties aer .n:..t. bJt n':t rec or id an co.tr n-

gnrc-ies w'ere- n-t reprc r t. d or f iririci l 1 Stae LTr r.t .

They r-ecormenjed asii k:n',..n entity labilliti-=s -e

rec nigrz-e and :rpr'raiatl1 reciorddc :1Brasfie

ani r-r:.rt2d. :I i-t-nt rcsni tt frjm, .r rietir:n.rit

.f ]Lt aihc-ul apprcar oin ar, perrtiing stati-enn:.

Pote ti-als ac:ru l- a-'Dse t. .:c ur i t ncl:-,-

r iqu: ta' sca e- .1i,' Le.gun Lr.. us reairsj t..:ci au-

:f attentiLor to ie. ii:tic sar bu. ,ia ar a.-cuntin .

:a acc,-rntirnjg -a. ..n moral ixn -rrit:nt i:ri ITP

c..a r :ilt...rns than in C-i Frrl.'t=c -iacLt r Thb-'?

r-.co.Diiern J Inr.te. r ati.:.r .f r contemp:.r atry coat

accounting tec~ri ique int., the informal cin -- '3t-m

particularlyl, those e mc-aur iri effic 1ency.

Repc rt Lng

PublishJ rnanrial reporter, t r.c fourin re

r..epare.l on i.lnd-i t'- JnJ j airi n iar-L, -year c-uigj -

tar.- ,_ -a i- '.i .j- n -c. C r,=,;! .J~ d rJ'r c.inmbarb d tat.:--

,-.,.L L-ins pr.j r p rej. T he-' r,-cor, '- nd r c ar ti'.I

.'r Ci-inroli -iate- iuni rtatcrri:.-t:- d sttECirie;i, orI

;-or at ions n.d f ir, ar,c al cond at ir to Su-ip i entL

th,_ u ual separate furni ..t-ite--r nt3; that i ir,:."'.d

--= Ut L e mr.j a t :"ull J -:i:', e tr.,rD.ajcr

E.a:te ed U e Df fO: :Lr.:'te t parenpt.-t c:.I dis-

C:L ,ur ar.'j ..i r.' :r .t L .' irnfor ,art- 1.-.n.

The ri-.:sr ?t of the Co :jit i- -Le A"cnc-.,ij rng Pr3a tr.- of

ioc- fi.-F-:.-fit Crrinizat.-n? his t e-s publihIt i rce;ntl

t:-at I: tiLicin, if ain, 13 ; it fith:c inr .

'5- C-r- ttl.-It inlyz;. anJ findings Jnjr l .:in all3 not-

c"-pr iclt : a, ..l.;:at .r- r:o i-icl.dir i :Il 3 e nuioa nments. The

C: -i:tt: s '- cr: icf c n-ern" .s l I mitc inr iir charge to

t-. r li at :r -.i' f *ur -' tL pr a c :- t h.c f.ou b s i:

: i r -r ;' j r: c I in --n irlr 6 : :m n r. f Easi c ..scauntiny

TI -- -:-.cil.e r,3 .t a temct t, r rt fo-rth a comrpre-

S-ii e s. : *5 r a; r, .n-in t ri r ln.ii .- fijr n[r.t-for r'-, it

1.i-i ,t. : :.l -.,ru ai the ,. ,;ri tt-c .fc at=t ; t p.rfT.rn d a

:- 1._ c.,il'.. ri : le, S pirF :al tud c- E rraent a. cc urLt t.ning

a r. ic- .: m :rthi.-doIl y .-r p, ci f1 ai: I,iu at- d r sjultE. of

: i= t, ,u a '9r n',t i'o r s n.

rhe CD-r.ittr c d rcd "e an apperjidx 'with illustrative

or'-:.3nsets a-: appr-,a:his for pr.Faration ':., c:rn-solidatcd and

conr irdarin; frnanrial statLientZ. These 11iustrations and

th e aesri tl rj. =d in i s:usscn lr.j f .'jrlC'i's rort-leCi areas

.ot-in- to cr':. this o:-,. of the ri-net infornatfl reports on

a.:ccontar.3 i.:. rnonprc.i fit -rcZ s t public h-d.

A. :cIunrnr -3=3arch z ir r t-ar

Tlie .--rc.ir. Institute of Ca rtifi-d rLt.lic r.count-arts

i. 3-'n-; rally aonsidereo the -cst inf lu -rtial ariani~ation in

the U.nitrA J trjt s zn rnri tr r.i- ,J d '.lopm n-t .:.f Ien.r all'

azc .t d a.J c.ounc-ti prlnr i l Pr .:.r rco 1960 the .I-.iF. had

Jde.'od it -ittefnttion almost entirely to reI_-:1 .in.g p-F.cifi.

acccunt ing protbl :- rather Ll5n de. Ei:. i..'-r. f e : -niral

acco-u ntr in p.r ncipl- .-. In 1 59 tne InsLitute re p.:.n ir.- tc.

both inrtrrrn ind e l resurre prE rEu iarkd orin nie.a rograii

to i'.s n:c ni *.rit ;r n cx r:;e-ion io 'i-at .:jrir iru -
-er3all.' a-cept-J a. .:.,r, tirn prin i 1:.lp ." 7 Acco:-jin ir,

Frl.-C.ipl-: .oard nr j r.:rmar ntt j:countin r r'sear:.i tarff

'a gr n t : rred tc, .:c -rr, out t ta ree.?r prro r:m. iTre -rezi-r:I

Fr: -:,- called f.--r tudL c-: t. o: r.:de e di -rt i-'.'esc ci -

tCrr .cr!r..; iand r n= ad- 'Meiri.r-C of thi Dicc'-or -. c:f unErn

F-ie'cr rd a- pr r j.]ct ad"is:.r'y C.-*urit tee. iTh r zul -- of

1 L 1 L I aid f ind ..rc to LE p'-L-1 '.J.d r,.. ; t L i a 1 .-

dis:.33 io. before the a.: o nuni L nl Principles E:;rdir made 3 pro-

n: rc -nern t. The official pr jn4 jnE-mrnt of cth E-orrd, ".:opiini.nri -,

are is.zL:. periodirall' contijen't upon a fa.'oratl vote o.f at

lea1 t t .o-thirdi of the toard mcmocrs. hi Thi.- r .apprc -'i, ..'Z

intended to be ;t reader in scope than r.'p.r.!iruL eff.rtr ar.n to

rel more hea .'il' on the "d-ducti''-" mezthod in d ..'- lopment of

accounting theory. Opinion .'ere t. b bas.:-Jd on brcad

prirciples and res r.-er, r.t tran r: rpr sentinrg opilnor: of

individual Board menbEr3.

27 Rpourt t.o ,con iei l of the :oe-cil j omni.7-.t-2 on Cz.;::.,-Cr
Programm" Journ. l o n c '-ountanc.r C' I. i eceru. er li15 p. 62.

ric ce. :I r.ih .:.:.T. i r. .te r.,Cc. ilJ inlrit jl l in an .:.r-d ri;

fa _-.l.Tin. TrI- pr:.p*:- pi ar .c 1 d lled f-o thj firi -t F tj LE

i.L fr.rrul atior, c.f 3a : t c.f [-.: itll ate : pF-:. ide ir,.'r i.n

.:'r :t.udi a n brr-ad r r L .:ipiie z.her res-arch di'ro ecr in

pc:il: arta:- -re 3asl.;in;l tc jcaddi2-n: p-rs:n-1.1 The

Acco.-JntfLr : -ri-nz 1l 2Borjn reaction -. to Lhe r-;arch on

, cS tulatI ., Fd in:i.le 3 .'as to pr.;"ie ir ui aii-l i tr- th.'* rhe

rea: =rch-ir3.

The AIC ..' spcril l Co3-U,'Ltrt-L ,3n c 2ccrC. h r Pc raim .t- aLtd,

S:- t'ilac : are f-'. in ni bes -r d are t zh. .aic
.ass'-rp, lctL t-n h hi-h p' ir: i I;: r.t- rTh.'2
-l :_-d rri / ar'. dern ed fr:..i- ti,.e :.,..e-ic and
-olIitiD i n. r n zn ro"imen ar.d r- n r, i ..
;h.:. glir I d :ii; '. : -r f n! 1 .ri t u r, tt.- c.u 31 -

:.- ::Tin oC f : -3tLi t e .3 n. Inz ri ro' tioj fr t'h. ticr hal

a=- jlr liz'd -;ca. i: 1. 'fcLc j/ .uch accoun tin.g i:'r Sera as MIay

3.,- -~=t n.

.2 1i1 i 3tuclia -.n th: fcrr-uleantin *.f tn- uasic

pu-i3Sl tes .And principles *-.f accounting -wre puUlished in the

*a r 1 961 -. rin 1cco.untin F. --e-arch Stuj. 1.. 1 The Basic

P.-ulate of A' cjintin:r, th- iuth.r, Berkeley Professor naurice

-:-,nri i z iden-tified fourteen "Lbaic" p; --sulates upFon which

.udi' -. sutr.-red b ProfeE.s:.r n c-anitz n- f -llo- Professor

.:Lid., r. 6'.

S'ee .-.,Ar.dl>. li-F for a slr r-.ary --f the "i.:tul ates" as
c .1i L.,.] ir, this study.

P ir tc r 3j and a rE Inti i -... n c inr.-n Pe Ear:ich -tuj !.

3, A. r-encratl Ect of Br:jd -cc-.-un'ina Prin.r cr.il f:r Ea sine -
Enterpri-e: Tr.e ac:. untirg :;.rrlr.: 1 e-c iorr.h L..' r.ti

auth-iri ', re e ser.ti il5 / Fpr-.rit-. Et .'e nd cnta 1ir.nc. r- i.j er-

abl. de'.z iati. fr4' I :C C-acpt- d c -rr.nt pra.:ticas. For -:.: amFie,

unr J th.3se re: j r'daniri pri r.cip le cih- profit re ul) inr.g er,.r.

op ra tl..nr : lo.uld L. reco. r l"- .i in ;tages fr in-.n:i Zt1 t ri e n te

c id sar.. t.e effrr : f Frice le il chtan.e. ;r. p aianr. an

-:i i p.-rn t '. i,-Ild b. r:-atat:d pri.odic:all in terrn of .jittL r

r-i j rl a -j i .

I-_n ig atl e- i in e r.1. ir ,:.:, _n L,.: r ..:g ,r,Et ft.- ,,

Ili ,1 e: t : ie jar A a valu n e rn L i buo r n
-- r-L* grC. :ti cni1r:. 'iri j u ii-.:nt.;r.tf 1r the .d

to ac. un rrina thri, nc t1he' e ar too ra .ic.-l 1,
df fr -rnt fro, t p res.' It n :r -r.ii; accpta cC.: jrount-
in.] princir.:i. ii 5 .r ::c.cpt ance at this rtim:.'1

'.r.-. Grd.Un mr'cd. up thI fce- irngs .f m nriy : -5 i Tmician ,-

.'hen ih- nrn d,

C IDnld-Lc'ati of th.- n3'ur- of pC otulate:s an
prin,:i[..le anr their relatlnr to. eacih .threr
ret.-als tilt t:i i D.Dn1it: inr Sproisc a;proa-h

i. -- -- - -
III:' e .a-pentj... II-C f.r : u, jrr / f t rin 1-ii -
Spub li .s5 in ttris s E-i r

3-- tate'.m --iy. L.1 tr- 'cc *nc ny Fri.'i plei Bo-rd I'i .rk:
Ai : t.erican Ins3 itt..e :1 Certif :.: 'ub, l ..-;:-l.t f..rnt1r.t3, a'-. 1.

1 at L.- t i-L licult to' imiil- ri. t and un11Ki l lc
t -: l' 3-,

I r. i rE-1E :.t l 'ic, n r,, ra7 iti t r, irz of cine 3 tuJi.i .--I t d at',.'erE

010..', at l-eart on cr.ic s.jrf ac:, t ) th.e .".-I A a'. pla.- fo.jr clari-

f:'l r enrally accepted a:.cuntirn principles. The research

reart1, i rale not intended to:. be automatically .ap011-I L'

th- A.:cointing Pr .nciple PDjar., it hlJ eaen hiopd :.r:uid s-r'.'-

a a u3i f,.r it =rutjbeqajent auJth-rli tac1.' pron.urncelenits.

On.- Orf t-hr; f r *7rlicismB Of the s-Ji ;ll ::. that they

: i.-bir L-rescr oipti prirc pl. t. t. ..tricri tr.: tijiji& author

b L--.'- 3 .a::c.c .ntir. shiul. cr ':nif rm, '..itil d scr pti'.'e pF irL ,ipl, s

C..- tas i pFaL'ic tic in .Tun-. IK 3 thi .ccoun riqi Prlnciplet

E:.ri a5pr. ,.' a prr:c.]e t inte;. to. pr r a dus -r iptiv, set

-;= -,erall aiL ted rc.-. nt n pFr nciplCs. Faul Grd3iy -'as

i:: -- si or to "ljen. cfy and crodC f' t.h :ccouJnt iq prni:iples

f:r :inLe.3 antearripr-ss which na : sn e.' grn.-ral acc.Lptance."

Gr: a a- 3 :e*.t' '..el-respect.d prac titlioner. He had retired

is a ~~rtnri from the pFr-tigious "big eignt" firm, Pre, Water-

h e rand Corripany, ard ..33 to ser:.e for :.,'prai. ',earE as

director of reseaLch for the imerican In-titute if Certified

F-bli: ;.:c;ur:t ng. jr ing his career, he ser'.'ed as chairman on

32l'.'ron ;. Gord:in "Postulates, Principles and Fesearch
in Ac:.-Lunting ," .:.-c untir.g Feview, X.XI ., I.pril, 19G4), p. 253.

Paul ,ra "Outline for In.fent.ry oi Generally Accepted
A..n::untirn Friciple.s for Lusiness Enterprises," Journal of
Accounrtncly, C-:"l, liovember, 1963), F. 52.

nurco.D, i r, irititti t .-LTIIttCe, I n:lu nii aujit ir.i t *ciaie

r ationi it thI e TEc ana pr:actriA re.-i... iH, :il ". .er -d

a: zL.ai-rma ,or. t h.: Ho.-'.'cr i:-ri s i.%:-n.r, Taa3 : F.-.rc.- .*rn :'- rri.miF r-F

Lendin .Aer, ?3 In 1?59, he n. r j ta re ei -e tr, Inri3t rur..t '

gold mcdal for distinjgui n' 1 .er"ic t,. th: : r:.unrt inr, pr -

fei r.

-rjad' hac dr'.A zatej ucr a S cu f .r 3 -,i ber :f ar .

Trire -'c ild b. .jca~it ieLit n ha.'inr a bref
j-,ur iary f ener.aal a-7:eFp:e-E a :o r-untir p.'r..-
'i les . .. T E- prt ir largel; :.rue :1
ta-n -fi.cation af tr.- :rinci l s op ,.,ri2-r tl-,er
ls ?,n eral a= firearm t nt anr c.f cl'.-elopir? t ua.- jl
Fpaterr-, c,1 arranri g me-rit cl a si f 11 at i[. t

in nid 1 r6 A.rc'juntirnq ei -e=a-:z.h LuJ, 2 ,L r '. r'.':n :

o0 nidrall'.' : 7 LPt d ..cc :,urA tiin Pri i:, .l le for ,Jil a'5 Enr, -

r-._e 'as a ubli-t. In t.hi stud;., Gra r-li.d .cr'; 1 ,.'

r- r'="lo'iJ -.i. r-. Fprioni: nc :ments, the .-.:c lzJl tri Euii 1 and

.-. .:cn tgqom-er Aud itln n a id i u.e-d auditint LI-.'r..

In this st.id.' Crtady' *efne-. accc-untin-r

.'c- :.j- tin r a 1 t-hc b r:. of In., .-lije and .urnc itr l-n
cj-r.cerrnd with s" L3 tC-i ori gi~ eating, ai-:icrant: a-
tin., racora-ing, :laEifrirji, rro:a3ihn, srnmai-
ziing, anal; :ing, Inr r reinrct l, and supplying
dcperiable and ir'jrnific3nt ir.-'f.rimatl r c:-'Erl-n,
transactions and e.'ants ..h. -, ir ar ir. aar at l as t,
of a fii-an-:ral c .arar rer, re:uire for th:- t mr agq-
i-rent andr .perati.n .:'f ani rtity ar,' for t rep .:.rti
tha t hiM c ro be -:ubmiittej cth.;r-n t. iF..::t eidiuc :-I
rni ot -ier rer.Fons ilt 11itie . 5

Fau j Gcrac T "TI,. *u.' st frcc utC'o.untg P riri~ 1- ,
Journal of Arcc.: -t nt,-r .. I i a/, 1 2' i21, p. 4 i.
33P.a:ul Grady "In'.'ert.Dry .f Principl.-s," p. :..


in P i S3 Cu.', inr- rted rf ric u : in. tne rrrn "p. i 'uu-

*s, :r4i return r-i tr terry tal:: cr : [.: ts," n..7ich

Ita : b:r used in srie c-,: r I ier aC :u r nt i n .l c: ti rn.

The termi 'po.s ulatesa'' i nLr beril usid. It is
belie v -e that the te-i 'b~i. c:;-r:zept,' i:hich
nial bein uise- in the psti-hlt CorE'rjt- .'.:t unt-
i n Stair.iar ,j 1 pubDi i c 1 .iL,' ,orirt ican Ar ccoaunt-
Inr .'-;cciC l;r .r! is lte:- r u-dlj rst:d. 36

:.-:1;' --tiatJ t ti,- : biic c,.rce ts underlie :.r permeate

: i T a:- l.untirg t rin:lpl :., an E 'Tit n,: c..-Lulid ,!d t .,ri',-.d

e- *erienc:.

0f th: te, 'j sc.t5s li-.e by -rad,;, half *f hi._m rcpre-

S- -- :: .3 ich, jij.iinr ; :'-irrrnt Cod tiI tE.ts, are

: l a" r 4ai p.:.n. bui nes entire, *-~ji c:,nc rn ,none-

-- : re tor i n a: un-inz *..nsiatiL c, ceLe' ri, p r i .d for

-. e ,r, *n anj. l rat-ri ali-. T-,e r-ema iirin3 basic con-

:- i crt b;' rad,' l c': _ri'e gener-al a:ce tance :.f Lthose

r-'.'L:u r .rnt i'on. there ba3ic conc-p;t such as the "cost

-n:r c, ". aliz a tion c rL.n ," "acncruial c: ron :z[-t" usually

li s. in acrrcunitrin literature aire ni.ot listed as such but are

to, s m~& a.:- t e.: nt i moll ,1 .

Crad tcol. 1*-lat he jnefine as a "pr4aTim-atic" approach to

a'im. a ririn, accountir.: p.rlir cipl.s. s1113 urp-Bse as t.o. ll

ro i L c-b]-?:r.. sta.3 iafsr.i- ac'-:.untinr, perf.,rmanrzc and

-ras.Jrer, -., -1.A s t r..Jlard. :.f dis-l;; ure h'li]C had reached an


ac- e6pr.cd r-ta.,itj- in the n ritun l tz ti r .. rady list r i

objl.-i r i -'es o j u:iar. .c- :..... t 1 -. 1 :| = r.-i.rh nl-i at -sB

are ori.ntr. tc. [ir piF s-intatio... TE-, p rinii i -; -r Eenr &j

are groupeF d ind-r i'. t-ie jdini.q : I.Ai Iric:m e ni- E:.'pFerS 1 1

Equity, (CI1 i33 t I, i L- t iil il tirt s, ;nd I ) Fin an.: iS St1 t_-

r'n ts.

T i;: Irer r ra. y srLita rz.pre snt stois or nZ i, e

re Juire. in nr ting t-, .:Cjir.;s. The "LbaS2 c-:*-:pt3" and

tne "prrin: 11 ple" as f :L-rlaed B GArai; ir- SLeruTa3r iz-i ri

r:-.,l1:X II-H and Ii-i.

'ri.d prD.'id i rLf? err is f:r -:r i- rin7ipl.: i-i : aSis

: r l .-.:::p r irn :.Ci f rlil ,f p .r r ... usl pi .i tL --1

..C:o ,,r- jr P oe ar:h P ul lctirs. Sec iur ty J :: a cd a n ,- f.':,ie C IrLse Io:r.

7 --t r:. c'3, o j- pr icn- oi r r Un A :uncinJ g Fr incipl.s b: -ir .

aicrit,; of rt.i ") L jc-ties- n.j F Principles in ti nia st'.3

had Lren ,:utl.n-d iri -j eral in .5 mia : -:in rticle pubil i'-.e
before the st,-i, nad c-.-rn b seen j..irthzri ed. j. W.i Lrh ey..ptic.n

of advocating priLCe 1.,el adju-,istmnts, long a fa, orite tr.hm or

Graid and Chapt-er 10 in sh-.:r. 1. ?'.'cs his *-1i. on the

rarr-'Aing of 3reas of dlifft'irn contritc'ers5, ,Grad:; was careful

to if-u3 ln th.c a::e-teo.

'-.-ctl:-r tn.. A .-cit int r ; ea r h rtui' 5I:. has L-ie n

mi.-:: . e itorijl of tne Journal a f .c -,irtjn ch arj -t.-_r izi:

it as

3 r di "Th ;-'i3t 7F 4 '7- .

putt~ i:ii '-urL'r nt pr tl-.A in pi r per :_pe: t miirn jirAr.
ll c.nr:rned i:.f tnie gr.at p rogre: a.r.3 : .Jad ,m
niilgnlr i.L tin I area :f : r.crc-'. -r,' L a I Fci l .'. idin ar
Inra.'luja.: lI- ui.d tc rfurtr c r .J iihb r tolnr. o f E tr
.:c.- a:uincin ri r in.-ip:i E ard.. -

rl-lj: n Po a ll, the first cha rman o[ thi A.cc: ',rou in Pri-~ciples

,:afjr Itata.r t.-i t.:.c.o' is "l ir..-; to b: orne :f tha nrc.st us-ful
pJL- l:: t i :n -ir isu i b';' th- In t: i ut:-. n tl-ie o ha er

har. I artnr,' c:-m-rnt crrcbtal'y siurur-d up the -nr.i.t i:mr orf

an', =arade. i ari a : "n ie In' e' lLt:r. '. a s r nt iall the ccTr.1-

n-. .n cf ai :l pr. :-i. '.-:c.Jr tirn,, PS-aar -h Eulletir -. From,

h-S -. u.Jd : rf th .: E1 1 1 tin, :'Sr. Grad: I a able tCj ab-er'.'e

thE-- -ri' f ac C.un,'tar practice '%5a a '.e ll-fcjr.ded Fprin-

l'-l: :-f ;cO:un i- ng'i .'

It a.~:uJ-i b nt: -:d t:. t in .'Ica 's rtul j iS p published,

a.-. a 2 n::o.int:in pr ain:iaplia % r ne.t the sub-ct or an :.;t.nsi. e

: -L s ::._- prog.rar :.s pr :.''1-:-Js ,' nr t -d.. Lraj/ hil detailed

ainr.' id.j-tic3a c.ciriepT e.eral :'ears b.eore the pro-ran '..as

started. :'-ithcr "'cr th- principal "dC 'eloped" supported b;

i'.'ld rn--' of .g neral practice.

3 Fditori-.1," J:.jrr.al cf Acco'z-jntancr C:y'I.,: (i:ar.r, 1965),
pp. 2-2-.--

n"'elc. P~L' eil. "In.*tntory of Gcrcralil' .a1,ccepteJ Account-
In; i nciar .. ," Journ' al jf accoantanc.', C 1': :;;rci, 1.95) p.

'. u. Parton, ".'Ac.-oJnt ng F'rinciple .. iW!, Uni frmity,"
T'In nr t .r,:. Acc.-o ntant in Australia, :.*' l (Janua y, L 69),
n. .17.

r. r *yl. rt in3t-.-' n'. ar ttprp i' s frli[ E
tc. proi'.'i. ;'iy L.iiTj of m T ,i r-c a ;-' ..- r..
: ,u 'c rrt r.i- 3_i -- J I i tc b *.r.,--r a l c,'.-- c t, -,j

Po'.' i, in t-. :,'Oru e t. or 'i rj C3stud,: ailu tie r.-o

fil-e of ,l:u h dati colleccted for the sar. ; vtvi 3ai.o rn,:.=-;:

its i a n:- in tn" pJ icati.:n. i.

..1 in .3al Gra J 's stuJ) 2I tret b-es. isuniar,; a aiiabie

3t pri C titCio-'rs 91i. 1 .'e b..- th.n bjaD-ic pLr cilri e's of

n_ arc cl cc. u-'.rr -j for acc .it e taCle pra. ctice in rle :pr.i ate

s : -or a nJ clr. :-rJ. l cl sely to i r.- qrd_ :i e a .cco-ir, tinq

a= -.:. ,'.- .".Jt-[ r. n tejd, "Er far sa i a .:.ar. 1u.i =, -hre [_r :._-

Lr, are n'i aLI ,}:':,r: t :rnd coim.-.lte 5 tc'-n1,.,t c'f .'.r, -t :

r-- lly -cce.tej it the prest cr. Li t -." -r. p' t i i:u

- .?.-i, .h;e _rcu.--rit ceS .: f t!h it,.jy' F..L.I C ,rt oJri, 'i..J it-

--e_.tr:i ,' n ,ncsar tro '-r.ial nature ha.'e g-;ner al 1 J ::, '1"-

7..- talC bn ; r r c tlI1 ri er ..

A:zzaj.,tin, for c ',Trofit CErL'ngan.iztiC'nr

i'.-e a;t.dy .-cnducted b. Hir.ke ..as orglinall' : -1i33 i sine-d

i.i i961 a, a par' of t. res. -.rch progra.i of the :m-'-.rican~

Inst-tuta o.f Crtifi. PJoiic .c.,Lcouinr, L s. "The ,.'th ar.d final

re.s ar-ni pn3]cc :-.., u'ni-J r iJ .': r lites to the; -i .cLurntlir. CE

C.:.r-..ers, 'A vltte'r of Principle. 'A .::;. ur tir,
evie :I.T. :Jul_. 1 6 I p. 146.

4 .eildor .-u 11. rn.zcnt.or ,' .. 31.

4 's rL :,.'rn "F.e i ',-ntory of .-nr ally;
Accepted Prin.-ipl ; for LuEsires3 Enterprs .:," :,*.*.-:oLrni-- i ri F lew,
XLI iJanuar-:, 'I6 n. 195.

:.: rof t o'C ar. :ticn 3. iT.r L'.' n 1 .f E: 1c.r i.ir. i'.'er;

n.:.nu ; in c -r i.n Lhi Fpr:. l. Th- fir inl31,i Drf '- .hi

-u. 1o.r-.'r, re rnot a ccF-eptc f r pibl icat-in t. t1 i

Instii 3.. a.Jd te sc tudj' .3a3 pul l ih d.3 e .' rtu li c i .'. thne Jrer- au

cf Eusrin-; Fe:;asrl )f Ir.dijrana nir.'Ter-i in 1963. Presumably

rt-: iec.oT ,i.r.irstio.:3 of H rn.r: .'arisd too 3ilnificaritly fr.ri

rs5:ti:-" f r ac-eptar.:i b t. r. Inrsticut .

Hrnl.. cIn.ra.-'.-ri J nth Ft purpoA i of ihi. atu.i a 3 anal zing

=.r.. ei.'alJar.ir, i 5I un t'rIg an,.i Le- ort' i -. ra .A- c-=.- *.* c'l eid in

S .,r-fic area tr. ti-a liilh L f e -o t -r. ir.a.rLirir- c 1thir.
*,r i l -r a 1rr. talaiC q h :i cl r, .h i r.nar-n r. i t ha i t r

S.-. :. -hi 1 3 1 a t E 1 EJ J .

.e'r '. fEir i.J -.he .bject ouf .a.:::,ihting .a "c; 33sse t in

: :i f f l a-,ci l Oaff airs b' .th rin i an.aly': irn g, and

-- : -pre-i a.cil Infrcrmaio n in- pLarit -r ii t ti tlh-

.---:-. -:r. =r rn or r ro.iius a.

I., Jd a'. r 1 [. I, anal -sit., Hanl e first "po~stu 1atd"

- :. ,

acCL.u-'t. 1ig and r p-:rtri, practices --to be uscfuji--
r.j=t -t 1-.7i:ally consaist-nt ...ith th- object v.'e
chrt a n Jr.ganiLa tlr ori seek to ac-hi-% a nd .'ir.h its
OF:p-eantinai p.attrr reijulting from thnre obj-etl .'_ .

l'i .L:n 3:-'1 "Report on the :Accournt n g Feaseach
e t c r 'i r.'Cari Tn itt ut-: f ,. rti red FuL l
".:C t'.,l ," -.2countiri r e e., 9:*:*..."I, i Tanruar .il) -. 30.

J r. -. .-..-c.ui tir ,. t .

'itn d., lu.

i' is n t ir plic,: ti.rn triat u-ri-ri kn thi ,i-. ri. :,f

*.' ting for rnoncr rofii t r.ra :r a tic rn!. r., ar*- bas i I at--

la.te a irila.r to th:t e prmITI'- lgJ ar.Iq L- '-ti.--i i 1 in hi :r .--nr, r L

P:s-,jrichl Studiy [lumber 1. Henke Joes noct ial,1 trhi's cc. cliar.

He does refer i rdi-re :tly in 1 te tr 'i.-s:tions of his sr.udi- to

:loonitz'- pFoS'ulates of firi 3r.jrci l tatenrit it IE-I arI l .j J --

-'.s ir 'C-5 ', as 'rell A indl r?.-rcl t: ots; -cc .'i- (0<. i .r

c.n-i stnc IC-3j Heni:ke's s' t .uJ, a- '- hI .' nl3tCL 1 Ort j.-

r.a3ll c :rra-iiL.3joneJr d a 3 p r t -if th In str-tut ': r-3-ar:l

ei :r:-, sni he .as E of .:,.ur: e '.iar .'f tfl r,, Et ... i .1

ra-.- nic itre-t effort t:) d Ji-a s 1cr -.b i t c' f Lrc ic: '

os'.. pr-.. e j i -r en i t a et i f Tr irn. : 113 e P.r- -- i

. LaSi: pF-, ulate; L .I I'li.ii- his ,-.j-i,:- a ' L'.5 -; 3 a r L'

-: a 3 plaJ 'n crd to :co-iirn aLt he r uniuj :*-l'ceC:. raie-

-.*-.C and .-I Zr.; s ten : .

H-n': than dircctcj hi: arttntitn tc'.':rd d finia r.he-

-i.m-r.- Gbbjh bicvtl.' of nror.profit o.ruani: a i;n a a group. He

defines thii objecti.'e of nn:r-.rfit orjrani iatiorn-. a Fro hiding

i sociall acc-:eptae I 1 er'.',.--e for rn~nirs or t he s .-:ii grcup

withnoit regard for .any kind cf an -zq'uit, c r n r-Tr.erainip i nterest

in the entit .

He prc:.ntn5s thi as a 'qv-n" anj ref:.ren':Es an art:tl&

in ir.e t:--" '.ork Cerctii ed Fui l : .-:' :irn tari l'i.:h pr ir l1 J1i -

-usSe3 de;'re.'ia':crn in nrnp'.ofit r:.i .rii;n'at"-nL. Ilji r. -r i-h il:

nor the artil- referesl.- d slie.i light on hr' ti-c r-L e:r-I '. .

arriv'd a3t. I;ae oti-.tc r cbati- :on?-id-r :-d hjt critic er

i ,ere used Lt pi:'. til. pFarti:lar obL]t-ct-.c? t. it a.';n psibi

t* rri i- tre tob]:ct.e fr:r a s ii tbroaij eectruIr cf

:.r.4 nlz t a.:l a n he a ha ir.clu.J--.J .- hIs E tui"-' n!-z far as

Le :.bije ti 't of ocal g.:."crrrm.:nt, pr.:.fezzi.-.rn 1 ILteratu r

record -o c 'i en =.su3 of :.tj t'.'- e've. r..r Uait i .artizul ar


Thier L first of all, no3 aars-nmi.nt mc.nqr urban
resid rtl, Ls a B .:. o h; lT.: i .* 3.'.'e r nmrt T eit :i: t at
a-l. :r.Ci aint these ga irnr.nr e to Aer"e r1-
rri.l in :.rdcr to prov.'id f:.r lif a" r niltil& :
.:.trn r iS= t.icm ai3 om ~cth n :.f t ri arTi .:f the iocal
Cl.sj- r jDf Corie L'. -i "'ith the t .k. ?f djinr : 'h. at is
nrcc--.~.: in *_rder to.: atttaCL iTimfre L.uSirnes anl'
ir,-u tr t; th ar-ea: th ir1d g.ri:up arnt t-, !.:ccp
,33' n ti-,e :jt .-.f ; q 'errutirrnt at all leia l anri 'a:rnt:
l.*l.'al g-.'e rren' r.c re:Itrlct it actl'.'tla: tc. that
hit h hai3 L.::r. .ra itin I ll, r- ardjed a ine ce. ar.
SfoJrtrh jt'.J, jftrn :oanziLin3 of c lf-c-'rnsciCO
; ir.:.t ItIE a 16:5a1 *40"ernrti;n t a: ar. arblte1L r ao-ir.-g
-'. -:rrcea :r. a j3'1:= '.h rct'' :.ch mir.-,rit; cct:
at le I :.| - Il: c0 th [C 1 F .

Hip- r',G d.-:t. rmlind : nc ob]-t : c.m. o' -f nq..nprof t c.rqaniza-

r.::., Eir::.e 'O.en proce'-ds t-: prse art a comparlisor. of organi-

-ationa oprr'tirn~: cshaateruitics of pc.rfiti--.-crrntcd ind non-

,pr'fit organ iat in. Ths;C .o-.p atl.on characteristics

ir:luai: sc.ircai of c.aipital a.i3 ri.ve,.nue, organization and

cn.-.rol ]jstif~zctivon of continued :xisr.tnc.e, evaluation of

efio:enc. and paziLle bias an preparsti:n of financial

t e:-t er, ts .

hner:e conc ludez, the operation of ar enterprise arnder

u_.7i..t mit ai-til.cn dap-nds upon the e..ls tenrce .f an effective

Chrlies .-Jti12n, Public r.ttituJds and TIetropolitan
D. 3.'on "a3kir.;g .Pittsbur4h: Wherrett M1emorial Fund, 1961),
p. 7.

derlarin for Lt:-. cOiral. Jlt ~ it S is : r th I=r'.vlc' i t. iro'.iJii .

In c-ur ,: ,tL th-re are *:rtairn : se tial hu.:'n al

EO-ill--ty hi- j,:.;d rn t l.; :ar.tifli f.r all i er~s'-rn;, _r c :, ri-

le-s of triiir aLilit, toc pay. a Tree 3ar: fuiiille thru-.,n

the mechanism Of nonprofit lentiie. 'I manlIserranrt :-f r iu

an orianiatiri hai a re~spnsaibit r,:t prc.'1de ier'.i-ez in

an -ffi.-ient a rFanrn r a [po-jiLle.

in prfit-:ri-.ntej *:.rn.iciatinIr pi rmar-lne t .ni~i is

pr ,idj.2 by fi 3rancial r'e -ait or ser.l-ric. In

a -.r',- rof t rgar inizicon, L inrL nlt v.' ft':. zc. nt r uti .1.3 f rnuE

Cr.-_I fro'ii the Jcncr's .esir- co. proi'.'l ..h t he b:i 1 t -li : 1- i

L:-I-1], dJ irabl- 1 ,-- r 'ic.

Ti c,--atitJency' .I 3 hin".rO of t cr.; '-r jt'.on, ch:.u h n;t

S- 'nershir. control .:f tn :r:arln :acion,. o:3:u -s

J5s_-- .on similar t. that of th!e 'Lnmcs .:.f a profit -mkina

or;-s.l:atic.. The n:rtLitueiciy .:,f nonprofit :r3arnizst:on

:; -: th-ir di-satiu; faction through ':'ithho.ldinli supp.srt :r b,

vote. The ncnprofic orargnizaticn 3:ts in a fidu;aisry -`-it'y,

and financial reports ahoJud refle:t this trudt.

The financial reports or r, t nonpr:.fit -rgianiiiatfion, he

stares, reflet nuo real effort tr evaluate historic ora-r':1-

tiron l cfficicnc' t to chillc '-cnstitu:nts o anl'.e ..l7; re-curc..

allocati-.tns-. Finarcial data whilee unar blc to Fpr:- ije he

complete 1 ains'-I can jis:-lo e imprcrtanr fa.-ts. o -it- h:-.-o-,: nr

important ctrit'orion for jud-aing -fficinc in the abriscnc: -.

net in-or'- ani aZcODu Lnr r-pcrts should t.L org3an-ejd t.' '- i-

close thes., data.

In F r: a .1n 4 inncial t;it;r ,t .: r,.-Li-,- rf .t *'ra an -

'l: 1 Ca~r ru- c e t.ai',.e. : re:e' 5t [bla3. The r fi : 1

[.oj t .:ln -,h. ld n. t UJI.j i tat d t :. aid in fjr.i J ocl i ]ta-

t 1'.FL. F,-nd-ri- iriu, C-.tS n 3 c r jl a .a i rn c b.e hi der Ir,. Otcrjir

Stieq.:ri- Pi u"-lnl 2 1 .li nri-t DL-, .'.r"_rst i t.J1: '. ini ate

--.:-. =. .. EL-.JceS r 1e"en'eS o. cz \expenN phr.ulc not be b .-rie-d

ii i prrc.Ftri, i.3in L:2lount' but :1-irl; h:..n.

Fro.i ch.? e..:rU| ,ia l ri :f cr enea *.p=-r-aC.:.ral c.har-c.sterlstic-

t i ]:1.'t J oblI.Cti"r rIt telita. : 1. n l d -'

S .ir.:i l -- .-. .h ,.jld J dir-.:t..' t:. ar d :rn re f fe t '.'e

1. Th- .:':r. ,-t .: -n lh their k:ir ar em r'.' ,
.:L. : 1 -.'es a e c- r- a:[, *-J.
T h ff-c. i ;-i: *th .r -r' hi .r op3 raticn-

ThI e'artdZlhi .f tie r iria .i3ci-mr t.

ju "r -rit .- res; t ti..i of i tffcCLi-ene -, tffi.cien:;" and

S-; .c .:.ilint btilit,' ii er.Jd for an informat-l n sap tenrf hAve an

S:~rpt an: L, nc.-. -idc.abi cs .pracflnnng cic rss3 u Tne prob-

rim r.,3 al' -s been, arid rem~nirn;, he'. tm accomFplin thc;e ends.

:Er..;- sta3t. that tnhee zrit:ri; r-equire that finincill state-

"-.l'-ts sr.he' trhe IT Li t mf re-c-urC-s a"'4] .i sbl, t.-. an organi-

.aci:rn at par-itl:l r t. l-n_ :nd Ib) the changes in Ir iunt of

r&e 'iUiL'c- '.'j1 Sble t then over p ci. f F riO rtd: Of time.

H:" H 'nke :_rri-ia at th-.: fina.nci1 al stat -,t re..jul em -nts

tic.-. the c*rit,- ria for di i.-.sure is nor.t E.zpl.incd.

Hcnire cihn d tc. 'jri c. J t, '. pr.rtric s -ntret c r i, Lhe

fi.l,.i.ci: r =p.-.r of nrinFr,.: it e.r.tit t i. T'h:. he t ;,t-.

Lr;C done3 Ae : onfr.r:n :c;. tscr'.at a rcorre- Fndie-r, C ar.J

anal'::. Harnkc st-ate- thri bs3 e i tJrlorc- %.nich n ,-d t.-

be asKejd Cf thL usE'r. h a t dect l-na a'r madiJe? What inf.:rc-

mflti. is r re ,ircJ to n k tne it- 'n.rm irnt.i 111 nt .-n ..'

hi.-uld tre informat.ior *ar r i.an-2ed for effer LI re:tnLri ar1.

? .-r':e jid n E t Fr e nt ;n',' cmpiricAl LD a of h.i s.tu. :. uie r

nec Js. loLsc L0f th concl ;ao. ns lists. ap a--'ar at test tr ''ia.

I E:'Lrial m arieJna. n -iroup (t.c-rdi of trua c s,
Jite .to 3., A-.r.- I
Fes--cic:ii, 1 t';t' for .ri&:cng pi-nri.. ar j p''i -'iej
E .al'aiti g effc i c -n:: *:f internal rii-n -i menrC ,
,.j 3 G c3-.i ttn,t ch- or; *niLaton iro "o L '.'=r S
is o :ieCt .a ir. an r-fficlent nr nn:r.
Lbi Co- ti Je-r i,1i I-.c dir,--.'t: I A:-upp-.r tri-
*organi'z, aL:LI l-.roug r h- Lhe .Cntrltd Li on cf time
or rc ,curce' '_it'.,out r t-:u.i.- j e uix'.dalct ta.iciile
benr'-f ts; in e..ch n1- i
hi lrou ,p a- s part ci'ularlY' ,co ,'c ,rne1 1.1t.-. 5a --
*.'ring questions a :-,ether the ,orani ,--.Ti n i:
Fr o.'.dind the a-ri''' I in an efilri- eCt ri a -er and
ljIany itS res-iurc.- for the intenddc parpe.'. -
c) Cus t jcr
SEr.i i:ea isers h-.a'.c a rijt. ta t ud-3 e ..hc-tt r
impilcat ion of nut real-:inr a profit in th,
long run is b-ins mi-t anJ 'jn!ethr its charq:s
are e:-cessia.e beciau- of oper.=ti'onJl ineffit.c -
si-c ie .
I'1l P tI -. c
Thi. group i: Fr :,narl :oir'err. .ld .,ch -lef in irq
the social b.incfits '.' tchc'- -ncii spe:Zi Pa.ri ,-

le t Ce j tnza
Prrirmac' conc:rr. of creditor5 of rniJprofItt or.3an-
?Ations is '.iith cn.- .clit' to meet obiL.;iCtiors
of fut- un ntleiet wn.d prircic;l: p.,',rnts.

f:" r ,tn2.i.t 1gruF,,' I! r.c lu J -:, .. p l 7e l ato r .
anI .a: r- *titrn -ai icie3. i

TIh! ..eiCl1't t: L %c achi ci ti. finara.-:1 1 Sl t :r m nt

-rnk. th-n deterri 3 1 "1: .; ... 1 Jta'j tit."

He ni.- 11-t3 tthe l f ll i inq ..: n l1u;i:-,n r :.rJin.-i useful

ft 'irical r.[eprt. :i-. ",. ii_ ig fr.'.; ji Ji u~ aCon,. "

1. n *. :*b].:t"i l d-r trr ii.i .i :.p- r ;tFi a c tt::int
cnar, l ,',al. p th -' ir tr.r: t :a g'jli[r to ]u3da.
'-e) L -C ir. ff l:i nc i s d:ira:L'le for a .: .[..ropri-
a:t u f nin fttr y 1. rtini .n.. n -r!.rloft .4tint -
.-:_- .ns.
Ec-ii.- DuuJ -:tir_. 2.,-trL and 1-.q l r-T'etricLtJIn
tniit.- t ,.: neit i f appLil f a i ppr: iat; r L i ar s
Ic ..r nt r,. th r:,n pr ,f c it 1 S ,e-,ircble
to L-.i :;ni a t er-;rit i'ariu.l' J thu i'jrcE- ji,'a
arri ._ t,,;'S, f -t not C'i.'r-i. ,-*pcLe' ti- i re- Jdrcc:.
3. ..'-_ ,.. :.'r- a l' ltcar L'J rt,:e m ient f -1ll 7'r'3-
-nrti' tLh- fi'carn:ial *-cinditicn :Drri5:lt utcE in
i -P-2.tur'ti r t C.r rfl irar.ui .r 1 r* : t Ei
IS l-,,, nt t pn-,rt or t ie -. rai- l '-- LE- ,i 30',
jnI r, j l 1 t En- te c-iri -
-. fini rncial stat ,tiriri should t. -repar- ir
-n .;, -- .' and conr sl tent irinncr t". b2 mio-t
u-efjl tI-: all inlte~r ted 3.rO s.
T1h- finra:iul :-tat-rnte .riuld ait izulate *-.-h
eacrh c.th r .ar nd s-l. ,ul f.-rmi a "c,:nr ctirig-link"
h istmr,- ,.i th_ r:.r anizati:.in .:.*'.- r ltsl il ,.
6. NI',riproi fit financial l reps-rt- E'-i-.Iuld di :l7O-,:
Linsorf.r as is practically pr-i.sible, Lhe extent
to I..'h h tri. proTfe ed abjectl," f the Oc.ani-
:ati..n h:'.'c bEe n acl'ie3'ed.
7. Unprofrit financial reports should include a11
practically 11 -. -.llIale factua'lI data t-.at could
lir-icali' o hlFprul to anry jaf the; -.tcrnal
inte r-te..d arola-i in *vI:ill'i-t n trhe efi-cier n y of
operations anJ Irt[ri[nal m- rcnai--ernnt. taciujse I.
s r.'i.:--- nbj. ti:tl .' la 1 ubt;Lituted for pr'rcfit ic.tl-
ticri in tl'i, ir -a, the irintete sted gro',u other
than tl'ih cu.-tcrr.er. ab'" cr d tor., i'-inuld 'a-l e .3
lprrnir. int rn-3t Ln t!-h -:.xtdnt an3i Affictinc' Do
err ic.e runind're. rather than in th,: difference
b--t.een r -'.iv-nes and expensri-3 or -..rendi tures.
rinancial statements sho 11 be (. rq.an r- d .th! the
recogaqriton of this nr.el.

1. i-. nci'.r.r: f it rLn. i: :ati: n 1i EL id'jcia, r -:.
..f erLt i t.. Tc-;,er.;for. fi nacii. 1al repor ts ; r.: u .
'1 .i rl rer l tr: ', ; in whichh tr., s-r a rd.- .p
functiln nri bten :-rf:r-i=cd. i n rP P.: r ai1
r..nr7r: fit cr, n it rt: 1ll nrrr, al l r-: l ai i-
-l? .ur- o'r trr i wa i, '.hl :h the ;p-irati5r ,. re:p:.'-
it.iliUty has bten met a 1._11 a; trhe -:;ta:'t t:
himn specific abl itllr:r.s reiatring t: "jd:.i:,r
aCc.O ULita ilIit.'" ha'.' teen :irrl.j5 .:,ut.
e!. ecaue :2he puLic r,3 as ri--ied n.rinpr.rrft rrani-
:5t, rn, :ertai: F-.i:ial prit'.leg.-: a rn te3aus
c.t1.; mr r .'-p -,I d 'up-.n the- ititezi t :s t .:F. p r r:
Sisenti lr y :r a ti bre t'-e .'rn .r [ 1 anre.i- ,-'r r -r
bail the aQr.:.up hra3'.': a leA -:r a-d- r a ,i r. dan r .
ir.tcarc t in thi f-.in:na-il data f:.r ;- h iri -tiCe
t :1ar th.;, h .'- in th repc.rt for prcric ._nt.._-
prt I .
10. Ih- unli.- and. c c.:,i- n ru nc' mfa.' r l" t i ..)-i
X:, t- r, t _ori ac,'reditin 3 ag3- ,i.: s r,, f.:r s.T-a
jud ri-, t3 fo cr tr:--, ... L.Ent i rn .1-.ul
be qr'.in to pr-i' i ti. i; c-rtrain r- ;..rt it I':'.
f -t., r r *..n.jnr d rc.:n for .h--s- gr upe :. iJ-
d ire ;-- 13

tnk ..i : his a.3 r.nti .r, t: t : a',i r" r: 3r -a

3 .:-. intLing foir rire.F rc. i it *c ra.r. a itl n- :1r, n thc .-. 1 in

scate-,~-l: of prii.-riple. iT reirrt d*-e r. ot deal I-: s:attS,

* tni practice thit a.re "n-:r.cnritr.:.c-:r ial. ir'lud-z ti

tr. 1_ discussions:

ill Eas-; of ac:,- untirn;.
TIh accrual basis ;hiuld Le u-_d in ac.-irntin
if..r a-;.' noro.rofc it r.g an iri i .ri n r gag in the
man':igem-nC an ci n .'-L rsion ojf *-t cn oiiic re .ZrD--t..
12) D- prnc1 i t lor.
D-prteciatwi r. should. L-: r-co.rded L' all nr.npr.-fit
or amniza : ion In '. l-i h c ]e-.tl .'.e-l', .J terai ri-
costs anr the rri. asr r-iner L a o f Ich 3 n rhi t i m,.-u r.t
Of rn-:3 rc.. es ailaubl -tr- con-id,- DL tio, r in

98He-nl k:, .'c-.-ou nt ing, p. 3 .

I'. al atiCri t iie l CL! n- S of c.cerations ar
are usef il for i..d:ii rnn purpc ;: .
i I l.-.g- F.e.ce Z t.le.
P['i.-d es r .ei'"alle shc'ui e L h:.:n as assets
ijnrid r c't a trual mr iu o r of d c -'C.ut i n .
14 i .ppro r iation .
F.ppr :rria1tins should, n.:.t bi re.rir'ie- as exp.ndi-
tures irn a r-,:'.'n.unj ana expen Nrditure taterrnt as
apFgli at i-r'n in a stat ment cf ;:surcr and- a pli-
c.'tLcn :I net c'apraL ing re our:e *,r a3 ex.:pEn-e3
in a t:. mrr t fr. re' erue arnd ex n es .
I 5 c uni-r a n ce s=.
En._jitbr -n.r snhou i L, ; incluicd i n the rtatkment
f acur an ja-pl iciat i-n:. of funds.
i Si [T|;- Ut '.3 3.
'. 'i r .lli ut it i aCsi adlc tio il[. t an amount
f:r r-.' ice re nd r- j re b' un.aid ..r qgr-ss3iy under-
pa 'id pro ofeas lon l rairn [-er"3r, nel.
7 1 .AlJ : uiat. '1 izlL-,ure .
The tLa -steranL zh uld jaiclc.- 's :.,.:te-.er is
necessary to ma,1' th=rr, nDt ri, i i-eai iran to interested
rc-'pJ Th.: inancrai stztr.-ent; Shnuld L-e
r...ni:Czed to. shn t e ric ts rjnd r : Dr, bili. r.
i mi ianaiqgei-nt rn tihe us o.3C crgtatr.l :atrnal t l resources
.n.-] the c tcnt to ,hi ch the .bjectLi. of the
r.rq anijlatl:nr ha' b-ern mst.

In mialin, r-cinlernjar ionrs o:n oath the basis of accounting

anjr depreciation, h-, left th: -ay oprn for de'.'iation. HeenK,

ltrrcugqh reca~uTranning: the accrual bsis., stared ca-h or modified

accrual Lhac~i ; .ere jcCbeptabl,: ,.hen results pr.:Juced ..ould not

L. "signif icanti-, diff-rent" ir.-, th.:-s rc jultin3 from the

accrual i methAod. Eeprecuatilr. undcr his3 rcdunl rules woula pre-

-.r',lj not b- required .irn aOL nri= ed for decision making.

7,,e cn-cptts Aj'.-aned to im rao.'- finircialai t.attints are

n-eitn1r pre-,:ntcd in ernoghn decail ..r illustrated sufficiently

SD mal.r inn'-v.atiae.' propoi.tiorns clear.

F Firi3r ri [i L i--a t ri t

K;rnll.- r-'.::.[p-.T.e-|, 3 f .ir L ai ,-- fin n.:iai a s .. L e tw s f-. .

cnr :fit org:.- a-izartnr. .

1. ;he Balar r. Sheet.
:Ir,.:.uld 1 j : o.--r : all a ,srts hIld t;' h. -.r .-i, iia-
:ICi i. -th=r '.ith :i i ii 3i Ltn-t th, _'m in .*-
.CiitiTine s ta iTeii nt L r.-- Y li:t I f. 1l L 5 t-
L'i.-id- il ber.e'en *:.r rain re ,oirces. a.d ree :ric-t3.
L':c ,urct..-e; slatllities sr tld L, :r:,,i-- To t.at.
clai.:-. a.air.-t -arti: lar r .:i:- gru-*p: ::- j
r. a ij.
; t' -,ent rof Re 'r r. an E p-ens-s.
r .~l 3 i al.: 1 : : 1 j ..- rei :.r inI all i.s ru
a aiia bl Lo: tr. *: ntit a aliltic fa.r *. --[.ral
S- aL n3 [.J irp : -: -cr r31 n : r i ar'_ ir, :
r '. ., "- ce ac-::-Lun--i f--I in Esj::' a rr.3a.iriEt a
O praeser"- t:-'.e r[.:.L-r l -.i .er- tirn q pir c-ture *
r- -n.uj 1ho ui, Ce .-:13s- 3 Lf IEt -d b:' -:,urc a
.:;;. -; fjunr .ctlti l Cl,;. il. : at :nr a;:-'r.l ii t
.i :r .r3aniz3ti: cr l i truI tur .
3. t .T en. of q rang:-- Ir. F j cl j3 1 an:- .
11. -.tcnt t:o hich api ail "f t e :r ,3an i
r!s n r .- ri Tt I ta i ncd a .;-Tr rr. c r di i r- hcd .3 a
c n.er, ie f- ori' sh.: 'inr be 1inr.in btalarices b;' _:,.d.
Zan! r.s -aair, the period and enrdirn Lsiiar.ces.

1. --at-,enrt E S: .',rcs an-i i.ppliCatrions .-f .':;r.- ri-
;.; Fiunr; .
nr.:.uld aho ,: ttrie e.-.i.e nt of cc- Fliar ce ',,l h r i
a..-c, cejr e .1.:ii incl,-uding d.qllar 3cc. urnta bdl rje
fc-r curr-- t r' ;.'pt. an.J outils3a,. ai -rnu.iculbrans.

.N 2 e':a.m, l-s of tni s state ,aent ar t:' pr '. t' ide- .

orsie e- jeJ tn : tL.it liLt Hi-.'r.:'i ,jt-.i 1i d i. app.int ie .

l-i r ha t a : g : rf t r r it ic.i.s r tnsC itutL.e .and n ;; l u L

assur.:. tria : i.:r an i th- re u. C-. -,- t ; a :- -planrned !-i i-eJ

study i'h- : -i L:t, p,- lisr.. n ., -ift tiS- :.rtit.r t L, i ,-

appoinltmed a:, be--,aie o f r L c. rrT-L, r j atin th .t i'.at fri'-,-nm

current prac-.ic,-a, t it riacheL f:-r 3it 1ieinke cIul ha i. di-n-

-.ij i 1-1 .-. Ihi, ; .:. a11 in: r, z .. ,icr tr. r.g trri, c .:liu .r,: n ofr

iacce.pt.d tc.hni;uci thal are pe.cils ar to nc.npr- ic .-zc _ur.ttirg,

p.frf.r.iin:a a c:.niprtehr n r nis e ncF ircal -ti3ly of current .ccont-

ingq praF:citiE in non;rofit orqgnizationrz, pro. lJn.g workiale

--..npl-i of c'p rai inr sr;c r.5 rcnrt i .hcr. finarni:, a irn- other

qiantitati.c t iare r -cormb ired to present a cor,,preren al.'

pi -.u r,-_ .

r.cime's 3 tuj o:f a :coiuntin for rn-.n rof it -organizazions

i..-... ir jl r-,. of ,.rariri a io.'[Si i tn '* l t:.i r. s ..ork is

c: rrr.: lc.:al g '.'ernml.rnt. 5,hen reading tl-e enr Tir r -ep2 rt,

ir :'.'r, tlii is trit r rece' -J t ie di- tincL i.preion that

S r t:air c-, ; rw a imi to ar .1untrar. r.; ri i ratl nIs

_ h7 -h health an3 elfars area.

:.n.e' 3r. it shc.udI n r.c'' id r.o-- ccnc.rn it-

"-f ic!'. all nonprofit or:init;- ons He .cec11ica11/ excludedd

L.= fe ial and staLt jo'.'ertrin enCts, inutual '. 'ngs ban:..s and

r ;iuance :o-paniez, *cooFerat'.'e, l; or unions and F rl'ate

di21,'j-;:,3aincd c:lub. He presents no reasor, for this limitation.

On: can either or-nclud- his r-esarcn snoered tnar tne findings

anra rciri.ijr r lsatons3 of his repor: wYcr: not applicable to these

or:ni.zai:'n3l t.pes or more li.el: th- ranrae of hii analysis

d.i3 rnt s-tend o o tnci c or. anfli tion_.

: tn Dujh iiren"e oujtiiner. the 7ethodJl logDical pirn hc-

Lutiii::e in his Sa i,' the ind .'idual rarts an-j their inter-

cc nnnicti.eness to form the total methodoloJi n'.ear clearly fit

tor ett.. r, a l a; t tro thlS '.r'tl r.

In T h1 c:,5pt-r re-.:-nr. .-aj..r pub i ati.: a n- .., th rbrc-

prokl-r.) al .''-: re i .cJ -1 r1 :con.ii lIerabl.- d prh. ior ia-c h

work h iqhlig t? q i th t~i bac;r arrd of t-he stu. ..-itrri'i -.l.-;

u.: in ctsi studj:', an i ma.jsr rec3irme:.;dati: n- and findirni

i'-re pr-s:ntried irdJ :-. trrit--d.

Th-: 19r'8 ulJ.1 Catlioi t:he iliti n- l c: :.r-.- I :, c0' errn-

.:.er-]'.al .'-.cc,-j,,"tinn (,[:.'. _rimi]T,-pr-il .:,:Co'jnr.1rlj '., ji r. j ,i arn3

1 -i a cl l F-.rtL. f ri i- thea lae-st and r ,oa t ,:o- prehi-rnai --i I'

:,j-nti r.. '.4,liC a tl :r c 1 d2 -,:,rt n t, to tr,- 1 0.1 . Ti

m a-- r ,- L,-i'Ai ti-e zr t,ui.r ir a effort tis t r:n r :-,= Jr,=ici_;.al

r -.'e C:f ic.- r A-ss :i ati ?nr, altho.J]h n itr- m i tc :Ir car a

:: 3i .a e F a 3 i:, ar :- S pgor L a.- L..n iri, lu. in r totr L

:hi: r'-bil:-tlDar is :-ia,-.t d h a- ily tc -ari t, r,-d: :3,f

-..L-icic.al it_ a jll'. th oth r c.r : ; r. : e-, '..hricl:h Sir-l

at dh- broader set of all ni..nprofit orcatizations. int put5lL-

catio.- inrcluJd : Z 1.' a s-t of ba=.sic 'prl.,,CLpie:" of ..* trnm r -1

tal a-:c:u.-r:inc 1ll di s .:s iar of and ,Dipclc ne ntri -s fS r prn.bl.m

areas in e- ch mla. jotr fund, 3,; -odel firnan cial r por ts in' ri, ding

sta tiemcnts for in.J'.dual fund d, comi ine--J stement s t r tar. h-

organ1:ation o : a 'hol', arn-i -tatstica- l ta bles (4i a dis-

cussion of and :i'cE.:kl -t f.,r au'1it ing L f ,-i :-'ern ircr, ua i- ,1 -I.

(5) a L-anipl :-nart of accountS :. ltit.1- fDr m, =L funicp3ii-'-:.

Ine rubla ti rn: mbci n- -1.;-o ba c .corn .:-.t frc.?uer, '

referred , inr, ic- n-r :,i, it:-r3ature sauI a: cDnfl c t. :nl a'rnj

ob-ect r"it-, Lu.t i t.ge .r, t.: ir ie atl nrship to ttr

L- rin. ple' f rres ,nci anr preE nts n: r. mFr h-n c .tin .

Th.- cu.u ; cation liate- thirte:.. t si prir-n:pl.:s or "furnla-

mr-n.al ten t; 'Tt n pubir:s3tl rn re, is no r-acor.:d _acC Jrnt

Cf ho.: trc priri:-l:oc ref detrminire. C-'ontinruin the

historic trend fourin in tihee F iput. :aticn, ba i c recoirirmrnda-

tiTnri "aricd but !iht!l' frLm thr. e prev'.'iusly' published and

refi-tL tre l:',lw -1u:ion :f trh corn.cpts *:.f "coij LUriinlipal

rctrc. rFor the mri-_- part, the "Fprn: iplea" 35 publ shed

ar- r.i=err.eJ .ith ine p.: uI ritu).tc .:. r.h ir ccc'unt in.g system

tr : .as '.'1l".' ficr u,'ll ipaliltiie -r e'uJil7-r, si. ('.?ut of

:.1- r :e;~. rin'p ilE r.lutc .ithi r t n'.'ironm-r n l r. a 1 -e1 l con-

--r. LS cr fujnd struCLJu c.-.a djeirinq rh!- r.r inr:p a le s anr

:.:-nnr.Jatins as a '..rl, if a cit; or cc-unt,t asJr, ei- to the

-r:--l -til; n:- in t.-eir fin nf Lal re pr tin r resulting

-'.1-l pr-!crntati.n "ould frou'-de ar adequate ltgal ccount-

-*i i.i t *' .. the cai'; fl .' thrr'u-jgh th organization, for a budget

Tn- authcrirtati,. nrature -,f there iNational Committee on

C-:." mental .rc.unctirj's pronouncements, it shouldd seem, nave

until recently. pait been an inhbiting fac: or .on the amount of

published irdepenjrt research performed in the area of govern-

- rt-al aCcoul-i.n.i. :crpard to many otherr suibf:ie dr, .f

-i.:.ounti. the literatur-! i r'!la'tiv l, devo'.i of ptiilications.

.Judginr b; th- uJait: of audit rC.:rts and financial

c.t.Cn ents prcpar-J b' C'.', tht T rerican Institute of C.-rti-

fleJ PuFbblic .::c.iuintantts has not ade.uatel; add r.-ss: itself to

th-- i. :, i :*)'.'e- rj-n-[ a T--,, i.n- prn 1rbli m re a Pr:,.r-i[jT; .l If

th-. plarinrnc d-iu.-ti "c j,-proach, tl'aT' te ins r tut- inr i r..t J

-: th= h art i te s05 ha~J prone s, 'u: ful the .i:_-,tu ) t:

fori-uliat..! *.,uldU h ,-': ser-eI s a .asi .--,r c.nl fr-.r pri i :I!' p-l

of 3a:...urti g fi.r stre -ri"'ate sector, bui. f.-r ther p'blii: s:, tcor

a '.= 1 This .must h3'.'e t-sn e rat their .:O m.i ttC..-- .o.n Fe.ea,r :-.

7rcjram i:hJ3 -.lan-iE i -n I-CL, .. .: r .mmi 'i lCne o J. .. 5.

re ear-: :r gi.'r on ra jrt. Lnrg for r- r.-ir. -- rf.L n : 1 -.ri

T:-iC: Iin- tr ute' F pl3i reldi a p.r h ,,.-i the "ji- :ru:

--: .. a: le -r. 3 lIlere l i -r '.-l un c- sp l- : c.r..

-' .1_ L_ 'o- .::3- : ..t n Lon' -rs. -_ rc :Ounr. t,'i- pLi i,- i f

7_. l._n r a rin 5 r r _s i. -c c.:.urt i r.in L' R ij-j.

S r ? "b' ri' t t:.. c.rrulae l ,re re ,; t-d I, L, .r t:.i

"-:-. i. 1 drif re L t .:' the :=pon .-.rinq c.r l n i rL ..:.n. In

1-'.i. at the "pf C.ActJiat f a.:ou nLiir, a puCiiihe: in

- ::c 't in i Fesearrih '.-.t,-'. lJo. 1, thi r'itnr finr. t i .f : ult

-o 5s ;'..'*- t'-i c'i'Jti ur.'ish '' rectl ri" ii .lc riruini ri.-' s ec

or a c3 'iun t ing rinclpl-. s for local o rnii '1o:.r. :1cn ',

th7e po.tialates dli ntL scr"e a :u itabii crieria for ;Lc i'rcion

best'.'e r alt rr ati:" prln: .pilc. of l1.-c l ao'"rr.ixi'nnt -i:acc-U'i ri .

t:- ." the thrust of the ITr~ tte ini-':ii apt- .Ca -'h ad

implemen; t-L i n .:.ccou'tLing s arci 'Studi- I-.. i I wc.s

biu iad, Paul G'ra-:a', a l oi- t '- r.. ra cit i ,n- r a- o.,Tiii .-Sli.n

to inv:-ent.:o ac ur. ting.i. pr ir.: cr-lcie a '-cjusil, .r :t :eJ L..

business rint.rirris.es. Although readyy c .:'ij ,-tl_' h.' trc prri-

ciples ietnrr i-n.d befc'- '. h. "rc-: arcn" for thr sru'. '5

irit.ei th '.-r!. i- .-er~rial l -.*ccepcc.t c.a Ft. titioa. -r .as

.:-I -."- ir, C r',' :.f acc:. inr, t r prr ~.1 p.l s 3 F ~cc-tice by

crl i r-; enterpr ie .

Cr z-d':, i rn r rirentl r. i s1 anil',is, s t f L rth I a list .-.

ba .ic cc.ncepts, 'nLr h h.r : n tated "'un i rl ie" I.c :.untin prin-i-

le., ar.3 a :.:parat.3 list :r 7er r lly acccp.t J cc..unting

-riinzpl S.

[h. basic c...nc*n pt s .s sr .'.s5 byG' ra from experience ,

ai a.- i .1 e thi e ..cal gI.:-. rn- :.-.t ".'- t ng sy.stei.

r ei s' ji tlYinctY iL trl I ;LijjI b.' -'r ir ta n ;f actr al

ci- : a rec-.'.rt ar iari laL in ,.n*' r -' -. t !. T.e .iri-

i tl . : e Fc:i.LE 13, L.:C ausi ; the ra .arnce in L..:rth

r- 1 .. 5i..i [r' t. _- .:t:.rs tn r.- L.aDs. *d2 '.,bl entry' LToC:.-

i:. i rn E;'I'T. I mu r iu:ji fl I t L- La. ic .L-. rJ I.e -pin rr cc ss .

r i, in-;-ntCry :f prir.7cifp i s are .rc unjer fr.'e

e3;; I':1"- 5 I Trncans an Epen- ;. Elqiit:.', .-.sets, Liab1ilities,

ar.J : iranc al StLtenrFnL The-. prin:ples refl-et "-good"

ra-s~-17~: in prnr Frivate sector. As su:h, the'_ are iu3rded to

eff=-t p.ri-.: irnrc.ie eterninrtjr .ind reflect. the ittendant

mrtching of rc liz.- r--enues an3 asssc-ateCd incurred costs.

-. pc' I D .Jsl' r.,ted H'z e's Stu.i' ~as published lby

Iri aIn.9 Unrl.*.rsi.,ty sfter apparenr: reje:t.:.n by' th sp.'onsoring

.AI.F... 'T",e s ts e.J ujrpri e r. n.r 7 : i d' -..:ccc'nrt.n- for IXon-

pr ,- tj ianiili; -tiorn;, r t.a : aluats the i h .:c mountt irni and

ic[-..:rtling pra:rtcei of ncnrofi.tt srani-zat i.r.3 in light of the

en:.' --nmcnt in ..hc th e ited. .', the e cte th orcti a l frame-

u?:r': started b'y postulat ino tha-t nccunti ng practices must be

c n t r s nrt :.- hr, t r- aLb* t.. *:.f an r nr. '. t- :.. i r, irt

i.E rj; inq att i rn in cr r t. be u iise t :*. uTi L n31 r

:.f r.'e p cu=.;il l r operati'tn'a ch ar1 .,ctes f -:ti-.:= rnd a = :.:a Cr.

obj'ec Li"E *: f r..r;r.prof : 0 Lai ,1 2s t: i ns h= ::.r.cl uij.: tr i n rn-

cial .rartetm-ents f r nrorprjfi t .*rrgan li tia n uld r ,,n J ;rj ..i .

disclosure .f r anizaliz n3al effectl. .'Enerse ef i.i; r:..', :r-nL

arnsrerial sr- ardshiip. He re'rienddJ th3r a set :f fr:

e- ltnenrts (alrsn: sheer sta:ilmen- cf r-.ernue-. 3nd enr

.. in rj t bal~ rce and E; ar. e s an af 1a3c :.*' :i

f...-.da ." s. c, .:. t ru.cre that I pr :'. id.- C- c-: ri.r r-n

, t =a r ,i r i ari i Z at 1i.rI :I i : .,jr=.

ThE ra- cri cari ".c:,ur tirns' L. c:3a: i urj. rrt:.:: .

-.:' : a.-r. t.'o "c lm~,Li- t r i, r ba.i : a.-.*.:.urt .ii t .--or. ITr

i:i t..- .', .-: 1 ,t :-n p bliss ied a s-d. icr. arti: J r L. r. -.

: 3.* tI- noL r t :; con trjt, a3 : t=- r nt trn- r.' for -arcr'rn

r ;::Dantir, g r ta t : -Z The a j orfi r .her prese nrt : s'_ t a : f

r -. riez ti ." st inda rd f-t a Lou.Jrin t i ir tnfrmaltit and gr uid--

liner for 2-Druj ir i catirn-a c in..r rf.:ar con. "in stan, Jard

irelc.'-. .n a, '. =rif abiit_ fr -=d n f rr b- a an a p ar. L fi -

bilit.. .I',e irinend, i "ya.ri-s ick to nef 3-a. .--urr-rn

practices s-: inpro,.'emen' t c.-ulid oc r, Jd Thre cr.rinr? t3 3

dev l,: pe Ir ',il- in .`ll' ere in --ndjd ci . b.- ppl]. .iiC>t e z L r'rn

profit an d ronpr.of rr .organ' r' jA t corr-Titr e ,as appc= 3 rit.:Jd

by t:ie '.z cc a3ti:.n r.:. t .' r' c-. ,jr int n pFr tact :i :I ; o n:. :- Lo:r-

pror t organi/r tio-n u-in2 tr.e ne. I, dE'.'eloped =rsta',dar d I

to s j g- st cr.S -pe CI'.' ch !!-:-. i .-I report or t ,his *,:.i mi' tl:ze

a s -ubl ihedi ir. 19'i 1.n t!h ccoJr inrq Pe-i *. n C mcc.r-i ':.

f idd r'ing -., 'cr.- 2- ;c it, l .f Jrt re a; cc.-j-jt.i, p[r3r c l _

of ,,.,:-for-; : rofa- :. .r .;r1 i:i i.:.i TIE rI ,.rt r mad. a nrL.TibT r of

pr-:riptri" rE: )iru-cAi t.L-r. I-.r n r -'Cit.1-i, arc 3 .

T'i.- ;tJdl s i, 'nt; r J, anrd the : at r C l.- C-,ruil tee ,n Cr.' ,err-

ri-rtal .:-c rtir, ar- :.imi.lr inr mrany w'* Tnr- cudiji s co.t-

.'r.. a -3t C.ilihrrent cffcrt -,:.r :orei ard firnarr ed bU :I :

,ff-..Z 3 l 0 d ir thelr re.t p -C.tie a'eaS: =re t.. e to a c-n-

idrabcie ::..c-nt des:ript e li~tL .of r irr, [.pl r-lacting to.

':'J -'i'-'tic: a; ..I :6 t' / th. m c r p nr.:r_ .- s '.ar. i pr .a. ri-iOner's

:! fiel.-: ere- no.- r-,nr:1-d :.n e.:-:.t ,-:i .e r,.i ic 1 nar l'-

=. tr i Jj i *L r i :,.llr\.' [It l.ri i.u aimi-' t e.:I I 1.'i; orn

r- lrI a .iJ re ,of re- c.i :rj r a r r, ,L l r.:inoL' unm:iri'n[t5

:t c a:i n aja]i r rfc n. mri rjcr.i.s for 1 rIn i fi-..,r r iCpiartlure

S- -^ -- .. a A i, I. i'pi: I I pI 1 -aC 1td ITAj

i--: : li t .,- of [ rir:-i 1 ir ij did r e .'i? rela: ._

; ,-: r idl re a pr. :t tionr,-r ac .e.tari ce .

;nr i=t sjil s b ry t-. r ic :n .'r c r S.cc.rt inr, .- oci tl ri C.,nm-

Cr:.ttc 3,,.1 L,' H.:rnk irn Crn-trs-it .arc baSL: prinirll:. upon a

Je iJi.l:.. oprc.ac.:; s~r, ntial1l rf pres-erted 3:aiaemic efforts

z: i'ic.r-,e ma rr, :b 1 rtconir, ng in r- Ltitrt -j p.r:c t ic and in that

-:rs- rs -'crEilrticn3 ere r's.cri]ptl 'c; pLrinriiy cr:,.. enrtrated

oCi anral; 01 i of ehey pr.:blem arr.s: r ,a- r than :-.'.ro"rdinLg corpre-

h i.'.e 11iECn-i cf prir [rl c l I-. 'e not r cE.' a.1 id, acceit-

r.i: T.r, ri n rL .

S .. .._ stud, -' a dir-:c te to.'- rc bu inr; F- enterprises.

T!r- ;L'l c.t tion- or no h'-d rhL .-Si 3et ic3l .Au:: Lun LI r Association

-i"rc L^ri- d L,-.ward the Ir.7ad iet of all rnonprorfit organizations.

7-r .ff-.rt c t :atic: l *:,cr, In G.I:..-n mrrre tsl A.::-.7 -

in ha'.'e eten .i lr :tacd ~:cif a ly ar I: ,.:cl a rc. r ru-l-.rt Iriic:.

.~'1 -l hou'q.i --.3 J ..'orL '.'r3 dir.iec- t i.:.,'ra n j in rs-

rint rpr 3ji3e c-rtfin a-pl i.- a ..rn are rnot r-str.r tid t.:. tilat

set. ;lck r of t.-i ba-sic ccn.-_prt ad'.sarcej b r' arad *, ic luJirn

COin3iat;3 'cy c.a:er--sti 3 i 0oing ccncILrl, cont:s.i r at ln, -1

rc.:ns' jr, :: -*Epr i:ri, h '.::.' di a fpllic i aC il it t.: Ci' nrik.:,r

ch3rac:tErist -i :, ncrnircf t -r 3j niziat :i .

Tne tJ.-j -m b, M-erl:. iland the liat cln l ,C.:.,Tnitte. r.f.r ct

aL:. bj.astl ...'7 C Cr pr o rtu at' t-Jt *.:, nI r L pL '. .Je T'. i :l :r

..3sir. listr c- ',-t tr,.: aL' It boiiJi' be r-t-.d trio fi t

a-.--.r tants ": r .-n nr, th .- .npr._-f i t f ii l -,a" -E pc.: i i 7:

a- it inr g ta -; f- .r that field. In;t 3 i.n m n amil11i

'. "t 3a c : nc:rc-r.C:" a ii d ,s li, r .-.ry c-:-': '.I c

;-- -:13 l' C.ai -reSp~ o i t ,S t-r, o. s 3 -- aj'.a :,c.l d t; / r* d/j .

In somne --h r area-, tl'-; tuJ,.die; GrlrsJ.' and tr

:;atl inal Coirr. .e on:e Co'.'ernm ritasi .cc.nrt rn g nt c.-ifnrf l t.

Tne first t" c pri-ciCples of the liataL.rial Corcitteo str.id:,

dealing '.'ith li l comj-l anc.-': the h i r.hir p rincir le deal .] '.:ntr

bud-et ; thJ1 is..'nth and t. elftth pr ~-ipl E dz-aliin wlth

classic .at i n a.-. t:rrnalo.- could d [.r.-mabl.' fall irin-t Gradj '

cla aifl-ation ic.-. ae basc Co .sceptS rather tnirt pirl'c pi.-.

Trn y .rerc spc.-li :7- all nclud.J. in, tIl. l 1 t .-: f prince pl-s L."

the Hatio.- i C -.-i t&e o3n Go'.'rircnt.al .'.- .:- ,: Jan prese J t 1

because -- of hli -r: ical .robl irs -.nccurItered I., tlie rC'. n'r ii nt

of local )c'.'err_- :s or-tranizatic:.,. Irn ao: :n r,. irn fcr local

: .-,'r.,.ni s, f r .-.. i ir t r j ir or, :.f a atri acto .' t.huj e-

f teF- I'ith tLic a:c.c r,1rting ter:. ha; l.rn- be r i-i.ei

a- a z.rnri tcrn- .:.- ioo I p re:tie. 'ini c.on:nepF has cer.

Inri:l.c as a 3.:'i.rnmantal e-apu-'tinr. Frirnclpl,- since the

fir-st lis-t -,f rin -:i is prornmii t3 u, the Ilational Comnittee

in 1 934. LThere 3ar nocte'.'er c.r lari, a tions mt' i.i-i still lack

tul.dg- t sc. Lhir F er.iaps the c r, ci :ie irr ne a r. Grady,

c,. t: .othLr aJ carinsidtred tr ti LJget sy-'ti,-i necc s 3ary, but

L at f Lhe f inan: al a : :. rt 1 n repj r t t'.-tr.

Sc::.r.i air. me;t *:.f the 3iyr.lilic- ar3i cr-satl.-: factors
-ril-ar nt i- the ue :!. anri, o::rr 'o ,f a modJ rni
.icjr tin j and eu. udrir r 3t rr-uirae t:, seI Ipply
ne r,ajEs Dof mariaqement aLe nae Jia1t .'It. The
:*.lst Len.a ,f Such a ay ce-t. ia a.-urerJ a a r r c ri lit ion
-rc:.dant rr, fulfill nr.t af e. ;trn ai reciportiin
L u i r i: rmn; .

'i;:'d as an- integri- i n.l the "rinciple "' as promui-

-Z LoJ CGral.. J:I norit pror;.id an ; JirectCiri or guJ lance for

iocal o'. ernmen. accountir.n a sj financial rerportinri. Tihe

azi- *:.rienr-:ation ..of Grad- 's principles t-a'rd ruessurement of

::.-r:rate inrcom.:e Jo not pr,.'i.di a suitable :r-oceptual frame-

:.rrk f.or the prirciplFe of local go.ernmienr t a.:ounting.

In re''i'.:in- rezearchi public lnd n accoiurtinrg hieory and

a':r:ornLinr principle i thc- Inrflien:e *.:f ri 3a thor' education,

r..-erin.nc anid pasitorn bccome- apparent both in the nature of

ri- fic : j] ar,. their ac:e Lance I..- contr -Lt par-ir ;. For

FajlJ Crad,., "inventor' or Princirple; ," p. S.

e'-'ajrieple, Faul -radj a long-tire me-miber ari.j i rrrinzr -rf .a

r,-ra r putbl acc.:ur.cin fir Cr-.e v:u. nharil';' x.. t his

findir, Ai CCunrltan P eiearch itud. !io. 71 r.-z to.. re-fie:t '. rnr

he and his peers tpraoticed as "3jud" aicc urin:n. -.. thsr

finding vould ha'.'w iean a *concldiltr.iorn ..f hie tr.-.f .sian]al

life. On the otr.r rand i the ca:se of Acc:utrr.in, F-e;ar:r

Etud.' .o. 1 and :i 1, -h? .,uth:rs i i:.onitC: arA -r-.u-al '. re

acad miCi a'iaS. ;.itEr numerous l ,i .-icla3MiC'i .: acjdei-.i d i. c.:r

t'nc cars tli:t a ,c u.i-i: pr:cti _es *.juld decfiirta ly LE m r.: .*l ,

or. o ij !'hardl, a> -_:-t trhe c a'th:r3 tO a-.jliih 3 .jd that

vc j '-j5 r t at I :-:t ir. treir iriini. p'rou-i e 3 pla.~tFr.'-r for

S :: -- r lpro'.' ric-i t. Ti-e rii;c ftn.Jdin hl-L t'.c;- f:,r ,t.. :i c

b_" national C, o:lni tt-e crL ..'-- irre' t l A .ccour ti *'ffi ci t

rot .icnienIt of tr.c or a ni: ia...sn lma' cE 2 F r2.d t:. r. 'r ,

z .ora~L; Cr Fr.c"id prohlcin arc s.,iutrio. It i'..o l.W3 U

extre-ily unlikely noe:*.er', if the prin-iple= l;r f-orrth ,uid

run counter to good ,eer group pra7cti-e.

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