Foundations for the Future: The AICPA from 1980 to 1995

By Philip B. Chenok

Published by JAI Books [(888) 437-4636;
fax (212) 633-3680; usinfo-f@ elsevier.com];
$78.50 ($54.95 for a limited time for AICPA members)

Reviewed by Robert L. Israeloff

No one is in a better position to tell the story of the momentous changes to the accounting profession in the United States in the last decades of the 20th century than Philip B. Chenok, AICPA President and CEO from 1980 to 1995. In Foundation for the Future, Chenok attempts to chronicle the events, as he saw them, that shaped the profession as it expanded from traditional accounting, audit, and tax services to broader consulting services.

The book discusses many of the significant controversies of Chenok's time: accountants' legal liability, government investigation, preservation of self-regulation, changes in the code of professional conduct, opinion shopping, commissions and contingent fees, proper financial reporting, the role of FASB, standards overload, specialization and accreditation, accounting education, minority involvement, and the scope of services.

These issues emerged as the accounting profession became an industry, competition became rampant, and the Big Eight became the Big Five. The book provides background on the forces causing these changes and the AICPA's actions and reactions. Although the chronology of events that Chenok provides is valuable, an overriding analysis of what really happened during his 15-year reign would have been fascinating. The details are there, but commentary on the meaning of a true revolution in the profession is not.

Nevertheless, the book is an important contribution to the recorded history of accounting. Chenok gives an illuminating reminder of the significance of independence as a cornerstone of the profession. Independence comes up repeatedly, starting with the Moss-Metcalf congressional investigations of the late '70s, continuing with the Dingell and Brooks hearings of the '80s, and finishing with a discussion of the impact of consulting services on independence. In view of the current SEC initiatives on auditor independence, the book's coverage puts the topic in perspective.

Chenok's personal involvement and knowledge come to the fore in his exceedingly good coverage of the legal liability issue, the work of the Anderson and Strait committees on the restructuring of the profession, the audit expectation gap, and the ongoing debate over commissions and contingent fees. These subjects receive considerable attention, as Chenok provides fascinating background and tales of political maneuvering and strategic decisions by the AICPA leadership and AICPA Council.

His retelling of events during his years in office contains prescient comments. He quotes a NASBA president in 1983, "[T]he outside forces which are attempting to further erode our behavioral prohibitions are creating an environment which could seriously damage or destroy the status of professionalism which we have fought so long to attain." Chenok himself says that the changes to the code of conduct that opened up competition "for better and for worse, changed our profession from a cozy little club to a sophisticated big-business enterprise."

At times, Foundations for the Future reads too much like a basic Auditing 101 textbook, sometimes delving into historical events from decades before Chenok's tenure and sometimes revising history a bit in his favor. But, overall, the book should be read by anyone who wants an understanding of events that shaped the accounting profession as it exists today.

Controllership:The woek of the managerial accountant (6th edition)

By James D. Willson, Janice M. Roehl-Anderson, and Stevcen M. Bragg

John Wiley & Sons, INc., 1999 with annual supplements, 1374 pp., &170

Reviewed by Allan M. Rabinowitz, CPA, Lubin School Of Business, Pace University

This gem of a reference book is a superb learning tool and a treasure trove of valuable ideas. Having evolved along with its subject area since its first edition in 1953, Controllership provides an excellent analysis of the multifaceted topic. The publisher, correctly sensing that the controllership function is changing and expanding at an unprecedented pace, has wisely chosen to update the volume with annual supplements.

The book is divided into seven parts and 64 chapters. Part One deals with the broad management aspects of controllership in 12 chapters on such topics as the controller's responsibilities, effective costing practices, globalization, and investor relations and contains sections on additional controller functions in smaller companies, managing explosive growth, preventing employee turnover, and dealing with fraud.

Part Two covers the planning function of controllership in five chapters that review strategic and long-range planning, the annual plan, profit planning, and tax planning. Part Three discusses planning and controlling operations in nine chapters on sales, marketing expenses, manufacturing costs, research and development, general and administrative expenses, payroll, and service companies. These chapters include an overview of benchmarking and offer many tips on general and administrative costs and payroll processing.

Part Four treats planning and control of the balance sheet in seven chapters on cash, short-term and long-term investments, receivables, inventories, capital assets, employee benefit plans, and liabilities. Part Five contains six chapters on financial and related reports including those for internal management, shareholders, governmental agencies, stock exchanges, and creditors.

Part Six appears to have expanded the most from the previous edition, and consists of 14 chapters on computer systems and related technology. Several chapters refer to selecting financial systems, software testing and package integration, electronic data interchange, information system security, digital signatures, change management, and project risk management.

Part Seven addresses administrative and special aspects of the controller's department and includes new chapters on inventory tracking, world-class accounting systems, outsourcing the accounting function, and 60 accounting best practices. Other chapters pertain to acquisitions, mergers and divestments, reengineering, policy and procedure manuals, records retention, tax records and procedures, risk management, and the reporting period and how to close it-including a new section on accelerated closing procedures.

The 118-page 2000 annual supplement has five chapters on the increasing demands being made on CFOs as facilitators of change and continuous improvement, implementing a human resources management system, shared services by companies, and advanced accounting systems. It also includes sections on the Internet, the paperless office, and proactive review of transaction and other processing cycles.

This book will be of interest to anyone concerned with accounting and finance who welcomes the prospect of gaining new insights about a rapidly changing field.

The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.