Transactions of the Chartered Accountants Students' Societies of Edinburgh and Glasgow

A Selection of Writings 1886-1958

Thomas A. Lee

• Publisher: Routledge
• Year: 2020
• Print ISBN: 9780367500900
• eBook ISBN: 9781000167849
• Edition: 1
• Topic: Business
• Subtopic: Contabilità
• Index: Business

This book, first published in 1984, is concerned mainly with papers published in various Transactions of the Chartered Accountants Students' Societies of Edinburgh and Glasgow. Many of these lectures were given by eminent accountants from throughout the UK, and soon the activities of the Societies extended beyond lectures. The financial reporting and auditing topics are the major concern of this text – they represent the one category of lectures which have a continuing and international relevance and interest.

Thomas Lister, ‘Accounting Statements - A General Formula’ (1950-1)

The early 1950s in the UK produced few examples of creative thinking by accountants. There was no academic community, and practitioners were concerned mainly with more mundane matters of accounting practice. Thus, Lister’s paper is unusual in terms of its timing and content.

The lecture challenged the conventional system of financial accounting and reporting. It questioned the conventions of the function, particularly the influence of the lower of cost or market rule, and the distortion of profit by the realisation principle. The nub of the paper relates to the possibility of accounting and reporting unrealised profits. However, the approach to the latter issue was not described and explained in the present- day terms of, say, replacement cost or net realisable value accounting. Instead, Lister’s paper concentrated on what he described as the projection principle·

The Lister approach attempted to report the financial consequences of transactions until their completion (he used two examples of hire purchase and civil engineering contracts)· Thus, he suggested the reporting of the profits realised in the current year plus the estimated profits on contracted work or operations to be completed in future periods. He also suggested the need to project tax provisions on these future profits. Lister’s reporting would therefore forecast and report all profits on work to which the entity was already committed.

So far as balance sheet reporting was concerned, Lister questioned the use of aggregates of historic cost, feeling that the latter did not reflect a true and fair view. He suggested the revaluation of assets on a replacement cost basis, with depreciation provided on such revaluations.

Accounting Statements—A Genera Formula

By THOMAS LISTER, C.A.

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(Being a Lecture delivered to the Chartered Accountants Students’ Society of Edinburgh on 23rd February and to the Glasgow Students’ Society on 9th March 1951)

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I SHOULD like to put before you this evening some thoughts on the content of accounting statements, and I must begin with a word of caution. The views that I propose to submit will probably not be of much help to you in forming an opinion as to whether accounts have been framed so as to comply with the Companies Act, 1948; they will certainly not lead to a tax computation that either your client or the Inspector of Taxes would accept; they may even leave you doubtful of the distinction between a provision and a reserve. I hope, however, that you will not be afraid of straying from the path of orthodoxy, if I can persuade you that the orthodox, or as I prefer to say, the traditional doctrine is founded on unscientific premises.

I would also ask you to remember that this lecture is a purely theoretical exercise. It may well be that I shall go a long way beyond what you consider possible or acceptable in practice to-day, and, let me admit, I am seeking to be provocative. But the value of a theoretical study is not to be judged by its immediate applications, and practical problems are not likely to be solved satisfactorily except against a background of sound theory.

I make no claim to originality: much of the material of the lecture is to be found in one form or another in the writings of British and American accountants during the past twenty years or so.

My illustrations are not to be taken as models of style. They are designed to bring out sharply the points of the argument, and whatever seems not to be material for that purpose has been condensed as much as possible. Also, as a matter of obvious convenience, the figures used are smaller than life-size.

ACCOUNTING PARTIES

The earliest example of an accounting party is the servant, steward, or agent, whose duty it is to account to his master for the possessions entrusted to him, and for the fruits thereof. It is readily understandable that the emphasis in such a case should be on the agent’s intromissions with cash, and that the keynote of the auditor’s report on his cash account, or in more elaborate form, his account of charge and discharge, should be “sufficiently vouched and instructed.”

But, even in New Testament times, a steward was expected to do more than account satisfactorily for the cash entrusted to him. The servant in the parable of the talents who kept his pound wrapped up in a napkin and in due course repaid in full the money he had received was condemned, whereas there was promotion for those who converted the money into goods and traded.

Even when the principal looks after his own business, there are other parties who are involved. You have all, no doubt, heard of the man who found it necessary to have four separate sets of accounts—one for the bank, one for the Inspector of Taxes, one for his wife, and one for himself. As I have already said, I shall not be concerned with accounts for the Inspector of Taxes, and I shall leave to any of you who care to tackle it the problem of devising a system by which the other three sets of accounts could be prepared from one trial balance.

The most familiar accounting statements nowadays, of course, are Company Accounts, and with the development of joint stock enterprise the emphasis has changed. Stockholders require a report from their stewards—the directors or managers—on the condition of the undertaking; this, if it is to be complete, demands a great deal more than an account of cash intromissions. Th...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Original Title Page
• Original Copyright Page
• Table of Contents
• Acknowledgements
• A review and a brief history of the Chartered Accountants Students’ Societies of Edinburgh and Glasgow and their published Transactions
• Lectures published in Transactions of the C. A. Students’ Society of Edinburgh, 1886-7 to 1913-14; The Glasgow C.A. Students’ Society Transactions, 1903-04 to 1914-15; Joint Transactions of the C. A. Students’ Societies of Edinburgh and Glasgow, 1919-20 to 1956-58
• “George J. Hutton”—an obituary (The Accountants’ Magazine, February, 1912, 120-121)
• “On Auditing Commercial and Company Books,” George J. Hutton (Trans, of the C. A. Students’ Society of Edinburgh, 1888-9, 49-77)
• “Francis More, C. A.”—an obituary (The Accountants’ Magazine, December, 1905, 520-22)
• “Goodwill,” Francis More (Trans, of the C. A. Students’ Society of Edinburgh, 1900-01, 51-66)
• “Charles Ker, D. L., LL.D., M.A., C.A.”—an obituary (The Accountants’ Magazine, September, 1940, 396-99)
• “Depreciation,” Charles Ker (Trans, of the C. A. Students’ Society of Edinburgh, 1899-1900, 3-26)
• “Richard Brown”—an obituary (The Accountants’ Magazine, July, 1918, 279-86)
• “The Form of Revenue Accounts and Balance- Sheets, and the Use of Percentages in Connection Therewith,” Richard Brown (Trans, of the C. A. Students’ Society of Edinburgh, 1903-04, 3-22)
• “Peter Rintoul, C. A.”—an obituary (The Accountants’ Magazine, November, 1933, 580-82)
• “The Treatment in the Accounts of Joint-Stock Companies of Depreciation in Value of Assets Arising from Their Employment, and the Duties of an Auditor Relating Thereto,” Peter Rintoul (The Glasgow C.A. Students’ Society Trans., 1907-08, 87-106)
• “John B. Wardhaugh, C.A.”—an obituary (The Accountants’ Magazine, May, 1957, 350-51)
• “The Legal Limitations of an Auditor’s Duties and Responsibilities,” John B. Wardhaugh (Trans, of the C.A. Students’ Society of Edinburgh, 1908-09, 3-28)
• “James Andrew French, C.A.”—an obituary (The Accountants’Magazine, January, 1935, 6-7)
• “Some Doubts on the Duties of Auditors Regarding Procedure, Grouping of Balance-Sheet Items, and Verification of Assets and Liabilities,” James A. French (Joint Trans, of the C. A. Students’ Societies of Edinburgh and Glasgow, 1924-25, 133-61)
• George L. C. Touche, BA, FCA—a biographical note
• “The Form of the Balance-Sheet,” George L. C. Touche (Joint Trans, of C. A. Students’ Societies of Edinburgh and Glasgow, 1932-33, 56-76)
• “Arthur Newton Edward McHaffie, B. Com.”— an obituary (The Accountants’ Magazine, March, 1973, 150)
• “Rising Price Levels in Relation to Accounts,” A.N.E. McHaffie (Joint Trans, of the C. A. Students’ Societies of Edinburgh and Glasgow, 1949-50, 103-16)
• William T. Baxter, BCom, PhD, DL, CA—a biographical note
• “The Study of Balance Sheets,” W. T. Baxter (Joint Trans, of the C. A. Students’ Societies of Edinburgh and Glasgow, 1950-51,34-60)
• “Thomas Lister, M.A., C.A.,”—obituaries (The Accountants’ Magazine, March, 1967, 137-38, April, 1967, 143)
• “Accounting Statements—A General Formula,” Thomas Lister (Joint Trans, of the C. A. Students’ Societies of Edinburgh and Glasgow, 1950-51, 95-120)
• “Frank Sewell Bray, 1906-1979: A Memorial,” R. H. Parker (The Accounting Review, April, 1980, 307-316)
• “Auditing Theory,” F. Sewell Bray (Joint Trans, of the C. A. Students’ Societies of Edinburgh and Glasgow, 1954-55, 33-40)
• James R. Leitch, CA—a biographical note
• “The Accountant and Inflation: Changing Price Levels,” J. R. Leitch (Joint Trans, of the C. A. Students’ Societies of Edinburgh and Glasgow, 1956-58, 76-88)