A History of Accountancy in the United States: The Cultural Significance of Accounting, 2nd edition

Accounting Historians Journal, The, Jun 1999 by Vangermeersch, Richard G

Gary John Previts and Barbara Dubis Merino, A History of Accountancy in the United States: The Cultural Significance of Accounting, 2nd edition (Columbus, OH: Ohio State University Press, 1998, 577 pp., $55.00)

Reviewed by Richard G. Vangermeersch University of Rhode Island

Reading this book is a thoroughly enjoyable experience. While the first edition [1979] was a fine effort, this second edition is a much more academically rich achievement. The second edition has an overriding theme of the importance of property rights and its corollary in accounting, the proprietary theory. Reflecting the authors' academic and professional growth, the second edition is critical but hopeful. Likewise, the second edition is much richer in its historical discussion, reflecting Previts' experience in team teaching the history of American industrial enterprise, his presidency of the Ohio Society of CPAs, and his leadership role in the American Institute of CPAs; and Merino's long involvement with the critical school of historical thought. The authors took a much broader view of the field in this edition. For instance, the topic "Cost and Managerial Accounting" had 14 pages noted in the index for the first edition, while "Cost Accounting" had 70 pages and "Management Accounting" had seven in the second edition. The authors are also to be commended for highlighting the importance of the political nature of accounting in the United States.

The deepening of this second edition is also reflected by the following comparisons in Table 1.

Within the overriding theme of the importance of property rights, Previts and Merino developed major topics in their chapters. The reviewer noted nine of these topics. The "bottom line" is introduced early on and becomes the focal point for the concluding paragraph of the text. The second is the ambivalence of accountants in defining in a uniform manner a cash-like statistic of earnings within the traditional framework of accounting. The third is the Progressive movement in which accountants play important roles in increased efficiency in government and industry, in regulation of large businesses, and in income taxation.

The fourth is the topic of accounting for goodwill, springing from the watered stock arising from mergers and new issues of securities. The fifth is the "New Deal" and its actual effect on the development of financial reporting. The long-lasting, historical-cost allocation model is the sixth topic.

The seventh stresses the political, rather than the theoretical, basis for determining accounting principles. The secondclass role of accounting for the not-for-profit sector, in relation to the private sector, is the eighth topic the reviewer noted. The ninth is the hopeful role accounting does and will play in both the national and the international arenas. The development of these nine topics within the overriding theme of property rights adds much continuity and readability to this book.

The excellence of this edition notwithstanding, the reviewer offers these points for consideration. The first edition, coming off the exciting U.S. bicentennial movement and somewhat less academic in nature, may have had some appeal to accounting practitioners. The second edition probably will have less appeal to them, except for those in leadership positions with professional bodies. Also, our students are generally considered to be less knowledgeable in U.S. history than 20 years ago. In the reviewer's opinion, this means that adopters of this edition as a text will have to devote some time to developing a proper knowledge base for the historical discussions. Perhaps adopters may consider either team teaching from the book with a history colleague or, at least, asking for help in developing a reading program for the course.

The second edition should be used as the basis for the capstone course in a 150-credit-hour program. Every Ph.D. student in accounting should read it, as well as every accounting professor. This reviewer looks forward to the continuous development of the third edition.