The American Institute of Accountants and the professionalization of auditing: The campaign to end temporary audit staff and promote the natural business year,1923–1960

Introduction

Too often, the public accounting profession is portrayed as unable or unwilling to exercise leadership, or to act beyond its own narrow economic self-interest to address weaknesses in the services it provides. In a typical comment, one regulator concluded that throughout its history under the SEC, “auditors were not an independent check on management, but rather appeared to give management control over the scope of the audit” (Niemeier, 2007: 2). This view pervades academia as well. Building on the thesis of the professionalization literature that professions serve themselves rather than the public trust (Abbott, 1988; Larson, 1977), accounting historians have moved from emphasizing the profession’s achievements and growth (Miranti, 1990; Zeff, 1972) to a paradigm rooted in accountants’ reluctance to accept a leadership role. Previts and Merino concluded: “[Accountants] have been reluctant to extend their activities to become societal watchdogs … after World War II, when accountants could have pressed to extend their responsibilities, they did not” (Previts and Merino, 1998: 318). Hendrickson (1998) adds:

In these periods as in the past, the profession, collectively or individually, has not taken a proactive leadership role despite the many attacks on it and opportunities to do so. The reaction of the AICPA, as in the past 60-or-so years, has been to form a committee and/or issue a special report, then to relax until the next crisis when the cycle is repeated. (Hendrickson, 1998: 498)

But bright spots do exist in the story. This article examines the leadership that the American profession, particularly its national organization, the American Institute of Accountants (AIA, now the AICPA), provided in raising the standards of audit work and persuading American business to accept the need for trained audit professionals. To accomplish this, the AIA led a “Natural Business Year campaign”, encouraging firms to close their books at the end of their annual business cycle rather than on December 31st, allowing audit firms to spread their work more evenly over the year and to employ full-time junior staff rather than relying on temporary, or “seasonal”, workers. I argue that on this issue, unlike other developments in the profession’s history, accountants showed proactive, rather than reluctant and defensive, leadership.

Literature review

The dominant view of the accounting profession sees a self-interested group that works primarily to protect its own professional turf. Lee (1995) concludes: “The public mission of accountants has always been a smokescreen for economic matters … professional accountants respond to issues only when they perceive an economic incentive to do so” (Lee, 1995: 63, 60). This is in keeping with the broader professionalization literature, which beginning in the 1970s moved from a “functionalist”, altruistic paradigm to more critical theories of “jurisdictions” and “exclusiveness vs. market control” (Abbott, 1988; Macdonald and Ritzer, 1988; West, 1996: 81).

Similarly, studies of auditing tend towards cynical portraits of the profession, viewing their fitful efforts to improve the quality of the audit function as reactions to the public notoriety of major accounting scandals. Power writes of “the extent to which the history of auditing can be interpreted as a history of audit failure” (Power, 1992: 42). While this interpretation certainly contains a good deal of truth, it should not crowd out more sanguine stories, as Power suggests in a more recent essay: “Studies of auditing change suggest that technical ‘progress’ has always been the product of an entanglement of economic pressures on firms, social and institutional demands to demonstrate adherence to best practice, and fashion” (Power, 2007: 379; see also Fleischman et al., 1996: 67). The story of the AIA’s Natural Business Year (NBY) campaign and effort to end the reliance on temporary workers does not readily fit into an economic self-interest paradigm. As this article will attempt to demonstrate, the profession acted with full knowledge that replacing temporary staff with full-time, college graduates would increase their labor costs, and that they did not possess the market power, or even a plan, to simply pass these costs on to their clients (Spacek, 1985: 43–44; Wise, 1982: 45; Wootton et al., 2003: 54). In fact, the NBY campaign took place without any pressure from their clients or government regulators to change audit practice.

This is not to suggest that accountants were motivated by some vague altruistic or “public interest” notion. They acted because they perceived it was in their interests to do so. Persuading some of their clients to switch their fiscal year-end from December 31st was rooted in a desire to alleviate the crush of work auditors faced during the busy season of January through March, a practice that made accountants miserable and that hindered accounting firms’ recruiting efforts. What is notable about the NBY campaign is that the accounting profession provided leadership, patiently, and for many years thanklessly, imploring the business community to end a practice that ultimately served no one’s interests. Along with efforts to hire more college graduates, to rely more on testing of internal controls than on tedious footing and testing of account balances, the development of interim audit procedures, and the expansion into consulting work, the NBY campaign sought to professionalize auditing, both to increase auditors’ prestige in the public mind and perhaps even to improve the quality of the work they performed.

Bowrin (1998) develops several broad categories to describe accounting firms’ motivations to change audit practice. These are categorized as “Factors External to CPA Firms” and “Factors Internal to CPA Firms” (Bowrin, 1998: 52). External factors include pressure from clients, regulators, and financial statement users (i.e. “threat of litigation”), and “empirical evidence” of shortcomings in audit practice. Neither of these appear to correlate with the NBY campaign. The record suggests that no one outside of the accounting profession had considered or even understood the importance of choosing a fiscal year-end.

This must be seen as compelling evidence of the accounting profession’s leadership on this issue. As described in this article, the NBY campaign’s central task was educating their clients, Congress, and the Securities and Exchange Commission of the advantages of the natural business year. Despite its ubiquitous presence in professional accounting journals, the subject of the NBY is almost completely absent from the general business literature of the era. An oft-cited article in the June 1932 issue of Fortune magazine offers a portrait of audit practice at the national accounting firms. The use of temporary workers is discussed, but this prominent voice of corporate America never intimates that the practice is considered controversial. In an era when audits were not required by either legal statute or stock exchange regulation (both were instituted in 1933), it is difficult to imagine that accounting firms possessed the market power to press their clients for increased fees to pay for an innovation they did not even want.

Threats of litigation and shortcomings in audit practice also seem unlikely to have motivated accountants, as litigation against auditors was rare in this era and public criticisms of audit practice began only with the 1939 McKesson & Robbins scandal. Bowrin’s “Factors Internal to CPA Firms” include “CPA firms’ attempts to increase their market power by diversifying and differentiating their services” and “High staff turnover”. These offer more promising causation for the NBY campaign. The financial statement audit was a fledging professional service in the United States before the Securities Acts of 1933 and 1934 mandated them for publicly traded companies. Matthews (2006) describes the pressure on audit firms to justify their service as involving more than simply footing accounts, and the auditors of the largest American companies must have been particularly self-conscious that their “professional service” was being performed largely by temporary staff (Matthews, 2006: 78, 82).

This article also contributes to our understanding of how and why firms choose their fiscal year-end. Researchers have had difficulty explaining why 60 to 70 percent of firms continue to use a calendar year rather than strategically choosing the fiscal year-end that is most efficient or that most favorably reflects their performance. Huberman and Kandel (1989) label the phenomenon “puzzling” (Huberman and Kandel, 1989: 69; also Baker et al., 2004: 80–82). There is broad agreement that larger firms are more likely than smaller firms to use a calendar year. Baker et al. suggest that larger firms choose the same year-end as their industry peers out of fear that analysts will look suspiciously on a firm that does not align with its competitors (Baker et al., 2004: 86). Oyer (1998) writes: “Though a firm may optimally choose its fiscal year end early in its existence, as its business changes but its fiscal year end remains stable, the fiscal year end becomes less related to its business and more of a historical accident”. Oyer also notes “the rarity of fiscal year end changes at established firms” (Oyer, 1998: 178).

This article offers additional context for the study of fiscal year-ends. Oyer’s conclusion that “a firm may optimally choose its fiscal year end early in its existence” perhaps gives too much credit to previous generations of CEOs. As described below, most American businesses adopted a calendar year-end simply to coincide with the taxable year, and it took a concerted effort by the AIA and others to make headway against the inertia of this logic. The data collected for this study confirms that at least since the end of World War II, larger firms have been more likely to use a calendar year, and less likely to switch to a natural business year.

This article is intended to fall into the category of traditional/conventional accounting history, which Fleischman et al. (1996: 62) describe as “the metamorphosis of evidence into a coherent and probable picture”. I have studied all of the primary sources I could locate, including the papers of the Natural Business Year Council, made available through the AICPA’s archives and never before utilized by researchers, in an attempt to describe and analyze an issue that was once of great importance to the profession but has received little attention from historians. As much as possible, I have tried to quote the sources directly and extensively. Whether or not this results in an “objective” narrative, the goal is to present the available evidence in sufficient detail that the bases for my conclusions are clear. The reader is free to come to different conclusions about these events (as several reviewers have).

The accounting profession during the NBY campaign

The decades of the 1920s through the 1950s witnessed the professionalization of public accounting in the United States. Expanding capital markets required legal enforcement of acceptable practices, and in a nation unwilling to shake off its bias against government regulation, the accounting profession was handed the task of ensuring the credibility of big business’s financial communications to the public. Under the Securities Acts of 1933 and 1934, the Federal Trade Commission and then the Securities and Exchange Commission was ostensibly given the task of regulating Wall Street. But the SEC lacked the budget, the expertise, and in many cases the interest to carefully monitor the accounting profession, and instead reluctantly left accountants to regulate themselves. The profession generally left much to be desired in its handling of this responsibility. It was slow to write more uniform and enforceable accounting and auditing principles, slower to shake off the aristocratic pretensions of its leaders and embrace responsibility for the work of all CPAs, and quaint in its bashfulness towards raising its public profile in order to engender the confidence of Congress and the American people (Doron, 2011).

But on one front, accountants did provide leadership that substantially improved the quality of financial statement audits. Over the course of four decades the profession sedulously and often creatively worked to end the practice of relying on poorly-trained temporary workers to conduct audits. By helping to found the Natural Business Year Council (which encouraged businesses to close their books at the end of their business cycle rather than December 31st), recruiting college graduates, expanding into consulting work, and developing interim audit procedures, accountants succeeded in relieving the overwhelming busy season auditors had faced from January to March and made the junior auditor a full-time, competent professional.

The temporary audit worker

For most of the century, the vast majority of American businesses ended their fiscal year on December 31st, to coincide with the taxable year. This created an overwhelming busy season for auditors from January to March. Professional journals in the 1920s and 1930s are filled with lamentations for the “rush of work which is the worst thing in all accountancy … the accountant goes through this period of storm and stress and his family knows him only as a memory or as a fleeting shadow” (Richardson, 1927: 33). To meet this demand, accounting firms were forced to rely on temporary workers.

[Price Waterhouse] had to hire dozens of additional staff during these months, and typically 80% of these would leave by May. While some of the temporary staff were college graduates with careers to pursue, many returned year after year from colorful “offseason” jobs that included cutting diamonds, clerking at racetracks, and counseling at summer camps. (Allen and McDermott, 1993: 63)

All of the major accounting firms hired in excess of 40 percent additional staff during the busy season (Lay, 1931: 219; Rappaport, 1972: 2–22).

The life of the temporary audit worker was a dreary one. A senior auditor at Arthur Andersen & Co. remembers:

All of my five assistants were temporary men, and it was quite apparent that they were all hard-pressed financially … I felt sorry for these men and I enjoyed my association with them. What they lacked in education and accounting training, which was considerable, they made up for in loyalty and sincerity. (Higgins, 1965: 139)

In an age when the use of adding machines was still frowned upon by old-timers, the junior auditor faced “boring, grueling routine chores that … made many staff members in accounting offices little better than Bob Cratchitts on high stools at high desks” (Collard, 1983: 121–122, 144).

The still young and self-conscious American profession was well aware of the damage to accountancy’s image this practice caused. Ralph Johns, one of the forces behind the NBY campaign, noted that temporary workers tended to be “less experienced and less efficient men, whose work is less likely to add to the reputation of the firm”. Johns cites one accounting firm reporting that:

it quite frequently happens that the relations between the public accountant and his client become strained because the public accountant is not on hand as promptly as the client feels he should be … [the auditor] does all he can to comply with the client’s wishes, yet he has from dozens to hundreds of others making the same demands, all immediately after December 31st each year … a client or two invariably feels he has been slighted or put off unnecessarily long and seeks another accountant. He seldom meets with success, because the second accountant is usually in the same difficulty as the first. (Johns, 1976: 14)

The efforts of the AIA’s Bureau for Placements, begun in 1926 to recruit more college graduates, was hindered by the fact that accounting firms offered only limited permanent positions (Slocum and Roberts, 1996: 96), as evidenced by this testimonial from “a bewildered young certified public accountant”:

The colleges are graduating a number of men trained in accounting theory but inexperienced in business. This is right, but there is no place for them in the industry until the first of the year, and then only a very few can hope for more than a few weeks’ employment at scant pay … Is it right that a learned profession requiring so much training and skill of its employees should offer such intermittent employment? (Lay, 1931: 218)

A diligent temporary worker could often secure permanent employment with a firm after enduring a few years of being discharged at the end of the busy season (Higgins, 1965: 59; “Certified Public Accountants”, 1932: 98).

The profession’s efforts to change practice

Since at least World War I, accountants had been working to encourage their clients to adopt a natural business year (Richardson, 1927: 34). Concerted efforts by academics and leading professionals can be dated from the 1920s, notably in Elijah Watt Sells’ The Natural Business Year and Thirteen Other Themes (1924) and the 1926 publication by the Bureau of Business Research, The Natural Business Year (1926), based on Ralph Johns’ thesis at the University of Illinois (Vangermeersch and Higgens, 1990: 42–43). But these early efforts apparently had little impact on business practice (Richardson, 1927: 34).

Tax law was largely responsible for businesses closing their books on December 31st:

The Corporation Excise Tax of 1909 … has been charged with causing accountants and business men considerable grief, including that of filing tax returns on a calendar year basis. It appears that prior to the enactment of this law, corporations were free to close their books when they saw fit and many, recognizing the seasonal character of their operations, took advantage of the opportunity by closing their books at dates other than December 31st. (Montgomery, 1939: 530–537)

The accounting profession had warned of this danger, engaging in an extensive correspondence with Congress and the US Attorney General in 1909, but their pleas fell on deaf ears (ibid). Subsequent tax laws starting in 1913 “permitted the filing of tax returns on the basis of a fiscal year other than the calendar year … The damage appears to have been done, however” (Johns, 1938: 5). This is corroborated by a subsequent study cited in the Monthly Bulletin of the NYSSCPA, which reported that 65 percent of the firms in their sample switched to a December 31st year-end after 1908 (NYSSCPA, 1934: 2). By the 1930s, advocates of the natural business year had concluded that “the chief obstacle to use of the natural business year is custom” (Montgomery, 1936: 283).

The Natural Business Year Council

The Natural Business Year Council was created in November of 1935 (Johns, 1938: 5). The American Institute of Accountants had created a Special Committee on the Natural Business Year in 1928, but according to the NBY Council, “no systematic effort had been undertaken” before the Council’s creation (Natural Business Year Council Papers: 134). The AIA was credited with spearheading the Council. An article in Business Week relates that “late in 1935, Col. Robert H. Montgomery, partner in the accounting firm of Lybrand, Ross Bros. and Montgomery, and retiring president of the AIA … backed by the Institute … organized the Natural Business Year Council” (Business Week, 10/23/37: 50).

As favorable write-ups like this suggest, the NBY Council, quite unlike the AIA in general in this era, was adept at courting the attention of the media. One of its press releases explained:

The Natural Business Year Council was organized in 1935 and is representative of bankers, credit men, certified public accountants, cost accountants, trade association executives and business management. It has the active support of the National Association of Cost Accountants, Robert Morris Associates, National Association of Credit Men, American Institute of Accountants, American Management Association and the National Credit Office. (Natural Business Year Council Papers: 68)

The few mainstream media articles discussing the natural business year all seem to originate from the NBY Council (see, for example, New York Times, 11/10/35: F1; Los Angeles Times, 11/22/35: A16). By 1940, the Council had distributed 180,000 pieces of literature, spurred 250 press articles, and organized NBY Committees in 36 state CPA societies (Natural Business Year Council Papers: 137, 13; Vangersmeersch and Higgens, 1990: 47). A memo “requested [CPAs] personally to approach a bank lending officer, with whom he is personally acquainted, and endeavor to persuade him to induce applicants for loans … to adopt natural business years” (Natural Business Year Council Papers: 23). Council literature and press releases included tables listing proposed fiscal year closings for different industries, and the advantages to business were described: “It is clear that the end of a business cycle is the logical time to take inventories, close accounts and determine profits and losses … The advantage of presenting a financial statement showing the greatest possible liquidity cannot be over-emphasized” (Natural Business Year Council Papers: 73). At times, enthusiasm for their work got the better of them: one mailing included a sample skit that CPAs could presumably perform for local business leaders (Natural Business Year Promotion Kit, 1960: 38).

Up to the late 1950s, the AIA maintained a diffident attitude towards self-promotion, lobbying, and public relations generally, concerned it would cheapen the CPA’s image (Doron, 2011: 112). Many expressed similar misgivings about accountants promoting the NBY: “The thought occasionally has been expressed that we should not urge changes to fiscal years because we have a selfish interest in the subject” (Johns, 1938: 18; Natural Business Year Council Papers: 64; Tucker, 1929: 142). But as with their general attitude towards self-promotion, the demands of maintaining the CPA’s place in the American economy led the AIA to shed this perhaps antiquated outlook, and increasingly over time the Institute’s and the NBY Council’s efforts prominently mentioned that adoption of the NBY would improve the quality of audits by eliminating the need to hire temporary workers (Natural Business Year Council Papers: 41).

The McKesson & Robbins investigation: The SEC weighs in on the natural business year

The Securities and Exchange Commission is often credited by historians (and itself) for “professionalizing” accounting. James Landis, one of the authors of the Securities Acts of 1933 and 1934 and later Chairman of the SEC, wrote of “the fact, now generally recognized, that the registration requirements of the Securities Acts have introduced into the accounting profession ethical and professional standards comparable to those of other recognized professions” (Landis, 1959: 35 fn.12; For historians’ views, see McCraw, 1984: 186; Parrish, 1970: 200–207). But on the NBY and the use of temporary workers, the SEC and Congress, like corporate America, needed the patient prodding of the AIA to comprehend the need for reform, let alone act on it.

Only two accountants testified before Congress on the Securities Acts, the most important legislation in the American profession’s history: Col. Arthur Carter, president of the New York State Society of CPAs, recommended an audit requirement in the 1933 Securities Act, and George O. May of Price, Waterhouse & Co. spoke on the 1934 Securities Exchange Act. May was notoriously hostile to government regulation of any kind (Landis, 1959: 35 fn.12). His work through the AIA’s Committee on Cooperation with Stock Exchanges was largely responsible for the New York Stock Exchange requiring annual financial statement audits of listed companies in 1933, a reform that he hoped would obviate the need for government intervention in capital markets. And in his 1934 testimony he opposed both government imposition of “uniform accounting” (detailed accounting rules) and a proposed requirement for audited quarterly financial statements (quarterly statements now must include a review, not an audit). But on the issue of the NBY, May was willing to set his principles aside:

The great difficulty of the present position is that nearly all companies end their year at December 31 … I would like to see introduced into the bill a provision which would help to distribute the work of auditing over the year. I think it would enormously increase the value of the audit to the investor. It would increase the efficiency of the audit. It would reduce the cost, and it would be indefinitely [sic] more convenient to all the regulating bodies and statistical people who have to study audited accounts when they come in, and under present conditions get them all in a bunch at the end of the first 2 or 3 months of the calendar year. That is a very small and noncontentious suggestion, which I think would have very great practical consequences for good. (Ellenberger and Mahar, 1973, Vol. 7: 7177)

But small and noncontentious as it may have been, May’s suggestion (reiterated by J.M.B. Hoxsey, executive assistant at the NYSE and a close associate of May’s) was never revisited during the hearings, and the newly created Securities and Exchange Commission would make no public statement on the NBY until 1940, after the McKesson & Robbins scandal brought audit practice suddenly and starkly to the attention of the profession’s putative overseer (SEC, 1940: 392).

In December 1938 an employee at the pharmaceutical firm McKesson & Robbins discovered that the CEO, a convicted felon operating under an assumed name, had been preparing fraudulent financial statements for the past 14 years, all under the nose of its auditor, Price, Waterhouse & Co. The resulting scandal brought unprecedented publicity to the accounting profession, and resulted in major changes to audit procedure (Previts and Robinson, 1996: 65). The scandal also enlisted the SEC in the campaign to end the reliance on temporary workers. The SEC’s report specifically noted the adoption of the natural business year as a solution:

We deplore, as do accounting firms, the necessity for recruiting large numbers of temporary employees during a very short busy season. This condition and the lack of training in the firm’s methods which it ordinarily entails are inimical to attaining the best results from the auditor’s services. A major improvement in this condition could be made by the general adoption by corporations of the natural business year for accounting purposes. (SEC, 1940: 6)

The accounting profession’s efforts began to pay dividends in corporate practice as well. A clear trend towards adoption of the NBY can be seen from the late 1930s. Figure 1 shows a consistent trend towards adoption of the NBY, resulting in an increase of more than 200 per cent among all businesses filing tax returns with the IRS. To test the hypothesis, generally accepted in the literature (above), that larger businesses are less likely to switch to an NBY, a sample was collected from Moody’s Industrial Manual and Accounting Trends and Techniques. Consistent with the size hypothesis, by 1961 a far smaller percentage of large businesses had adopted an NBY than for the population of all businesses filing returns in 1958 (28.8% vs. 47.6%). The percentage of publicly traded firms using a calendar year in 1961 (71.2%) is approximately equal to the current percentage of Compustat firms using a calendar year (60–70%).

OPEN IN VIEWER

Figure 1.

Firms using December 31st FYE.

World War II and the domestic labor shortage

This article has emphasized the proactive efforts of the accounting profession to improve the quality of auditing work, but exogenous, structuralist forces were at work as well. World War II caused major shortages in domestic labor, and both audit firms and their clients were pushed into innovation by the demands of a wartime economy. The natural business year campaign took on a new urgency: “The increasing shortage of staff assistants due to the demands of national defense throws into glaring light the waste of manpower involved in the countless numbers of calendar-year firms” (Carey, 1941: 483). To manage the workload, audit firms began to spread their work more evenly throughout the year:

The war … put everybody on a twelve-month basis. It not only created a shortage of personnel, but brought new demands for accounting services of varied nature which effectively eliminated the slack seasons. Improvement of techniques for interim auditing work also leveled out the peak periods to a considerable extent. (Carey, 1954a: 166)

As Arthur Andersen & Co.’s official history describes, thanks to the development of interim audit procedures:

the January and February peak-load problem, although far from being eliminated, was considerably reduced. It then became practicable to take the more professional view that the maintenance of an adequate public accounting staff should not be dependent on the hiring of temporary men, but that the staff should be built and maintained on a permanent basis. (Arthur Andersen & Co., 1963: 85)

The development of interim audit procedures was the war’s most significant consequence for accounting:

The old idea that all auditing work had to be done on or after the last day of the fiscal year was exploded during the war, when manpower shortages stimulated the development of techniques which made it possible to complete much of the testing and sampling, and review of internal control, well ahead of the balance sheet date. (Carey, 1950b: 369)

One writer summarized the changes as “moving from leg work to head work, from mass checking to careful analysis … in part, this is possible because the junior auditor, trained in the colleges, can contribute almost at once to the head work” (Bailey, 1950: 127). The traditional emphasis on the balance sheet, “predicated in the past on an over-consciousness of the vulnerability of cash to peculation”, was moved to the income statement and procedures to test individual sales and inventory transactions rather than the year-end balances in accounts receivable and inventory (Cranstoun, 1948: 280; Grady, 1945: 276). A new prominence was given to testing of internal controls and the “planning and direction of effort to weak points” (Bailey, 1950: 127; Grady, 1945: 274). The relatively new science of statistical sampling began to be promoted, although auditors seemed resistant to this innovation, “probably a function of the natural conservatism of many practicing accountants” (Trueblood and Cooper, 1955: 221).

A new-found respect for the writing of uniform accounting and auditing principles, spurred by pressure from the SEC, aided the development of new procedures. The “Tentative Statement on Auditing Standards”, produced by the AIA’s Committee on Accounting Procedure in 1947, along with detailed discussion of interim testing in the professional and academic journals, helped circulate these ideas. Interim testing had not yet filtered down to auditing textbooks; the most popular, Montgomery (1949), included no discussion of the subject.

Conclusions

Some lessons can perhaps be drawn from the NBY campaign. The stubbornness of big business in holding fast to the tradition of calendar year-ends suggests the difficult task auditors have always faced in mentoring their clients. The SEC’s late arrival to the NBY campaign is a reminder of the inchoate condition of auditing practice and oversight, and of the limited expertise of the profession’s new overseers in the 1930s. Historians frequently cite the SEC’s seemingly close vote in 1939 to allow the accounting profession to write accounting principles (Cooper and Robinson, 1987: 137–139). But as this article has attempted to demonstrate, the SEC possessed such limited knowledge of the profession that audit practice received little attention until the McKesson & Robbins scandal. This supports the notion that the SEC felt it did not possess the resources or expertise to closely oversee accounting, and that government writing of detailed accounting and auditing principles was never a realistic option (Parrish, 1970: 207). And the AIA’s ultimate success, limited though it may have been, can serve as a reminder that the profession played a significant role in the improvement of audit practice.