The life and thought of Robert Keith Yorston: An advocate for accounting reform

Early years – family and church

Robert Keith Yorston was born in St Kilda, Melbourne, in 1902. His father, Robert Magnus Yorston, was a Scot from the Shetlands. He emigrated to Australia in 1898 and held various positions including running his own retail business. He married May Rose in 1901. Robert was the eldest of their three children. He obtained his early education at the local state school and then attended Caulfield Public School. On completion of his schooling, young Robert commenced employment as the family was facing some financial difficulties. He remained close to his mother, sister and his aunt throughout his life while his relationship with his father remained strained.

There were two main profoundly constructive influences on Robert in his formative years: first, the Christian environment in association with the St George’s Presbyterian Church in St Kilda; second, his close relationship with the females in his family, including his mother, sister and aunt. Both of these influences remained just as strong in his adult life and gave him a sense of direction in his professional endeavours. Yorston had a long and varied association with the Presbyterian Church. He seemed to have lived his Christian values. ⁴ It is through his Christian lens that he looked at the business environment in the first part of the twentieth century. At that time, the leading business paradigm positioned shareholders as the owners and the board of directors as the stewards of a company. In this stewardship relationship, shareholders were given “Supreme Being” status as they had a financial stake in the business. In contrast to this model, Yorston’s paradigm was influenced by the idea of biblical stewardship. This idea positions only God as the owner and the rest of us as the stewards. It says: “we own nothing. God owns everything; we are simply managers. In fact, we are all stewards, accountable only to him (i.e. God) for all that we do with all that we have”. ⁵ It is his belief in this version of collective stewardship that is likely to have contributed to his initiatives in improving financial reporting for all: shareholders and the wider community, including the marginalized groups at that time. In a 1964 address to the Lismore Presbyterian Men’s League, at the St Andrew’s Day dinner, he outlined his view of Christian service. In this speech, he referred to the Parable of the Talents (Matthew 25: 14–28) and identified himself with one of the three stewards of the biblical story. He said:

I am an accountant – it is my view that it is my obligation to use the one or two talents I possess in order to be the best accountant possible – I fail if I have the ability to be a first class accountant and I am only a second rate accountant. (NLA, 1983: MS 9064/13/1)

The notion of Christian service through biblical stewardship played an important role in Yorston’s self-understanding. As an accountant, he felt he had an obligation to use the talents he possessed, not only for himself but for the benefit of society. This notion influenced his views on the role and responsibilities of the accounting profession at a broader societal level as well (NLA, 1983: MS 9064/13/1). In Yorston’s view, the profession needed to help all, including those with no knowledge of accounting. The idea of preparing reports understandable to those who have no knowledge of accounting was indeed a noble idea and is discussed later in the article. However, Yorston’s belief in this version of biblical stewardship did not translate into any evangelical preaching to his contemporaries. He was reticent about his Christian faith and he did not attempt to impose his views on others. Instead, his views translated into a humanist and inclusive ethos as he espoused the accounting profession’s moral obligation to the wider community beyond shareholders. Yorston acknowledged female shareholders and the general workforce in his ideal corporate governance model. At the time, both these groups were marginalized in the financial reporting context as they were not regarded as the intended users of financial reports. Yorston believed the profession had an obligation to ensure that, in the financial reporting process, it treated all potential readers alike, regardless of their financial stake, status and gender.

The need to recognize multiple stakeholders

Driven by a strong sense of fairness, Yorston espoused informational equity and a multi-stakeholder approach at a time when employees had no legal right to information as to the results of operations or the financial health of their employer (Yorston, Lectures, 1960). The other disenfranchised group with which Yorston was concerned was women. At the time, awoman’s life was centred on the family and domestic duties. Their participation in public and economic life was rather limited. The gender equality legislation had not gained momentum in Australia. In this context, Yorston’s stance was avant-garde. Another noteworthy issue in this context is that Yorston did not live a morally compartmentalized life. He managed to reconcile his personal beliefs and professional endeavours. It has often been argued that business culture encourages a kind of moral compartmentalization and fragmentation of ethics (MacIntyre, 1977). Apparently, Yorston managed to use the tension between his personal beliefs and professional demands in a positive way. Having said that, it is evident that Yorston had underestimated the partisan functioning of accounting in capital–labour relations and in other social conflicts.

Educational appointments

In terms of Yorston’s professional endeavours, following a series of early appointments he began teaching at the major business private coaching college Hemingway and Robertson Pty Ltd (H&R hereafter) in 1923. This college provided tuition, by correspondence, for various accounting and secretarial professional bodies. While at H&R, Yorston studied part-time for the examinations of the Commonwealth Institute of Accountants. ⁶ He completed its examination syllabus by the age of 19. However, he had to wait until he was 21 years of age to be admitted as a member of the Institute. Over the next decade, he also became a member of many other accounting, secretarial and economic bodies, both in Australia and overseas. After completing a Diploma of Commerce at the University of Melbourne, in 1927 Yorston was promoted to the position of a manager at H&R’s operations in New South Wales and Queensland. On his relocation to Sydney, he brought his mother and sister to live with him as his father was unable to provide for them.

The forthcoming segment in this biographical sketch highlights Yorston’s endeavours in accounting education and professional practice in the first half of the twentieth century. It was a period when the accounting profession was in its infancy and the accounting discipline had a limited space in the Australian university system. At the time, accountancy was essentially regarded as an area of vocational training provided by private providers that included coaching colleges and public accounting firms. In this context, the decade of the 1940s was a significant period, as discussed later in this segment.

In 1933, Yorston left H&R and commenced an accounting practice with Edward Fortescue. In the same year, he acquired and became the principal of a private coaching college called The Australian Accountancy College (hereafter AAC). In the year following the acquisition of the AAC, he married Gwendoline Ridley. She was the granddaughter of Reverend William Ridley, a pioneering Free Church Minister (Gunson, 1976). They had two children, Helen and Robert, the latter often confused with his father since they possessed identical names.

The growth of Australian professional education

Yorston remained active in teaching and writing at the AAC until the mid-1960s. The AAC was founded in 1908 by Albert E Barton, who was an author of early accounting and auditing textbooks (Goldberg, 1980). It was one of a number of private coaching colleges that were established in the early twentieth century to provide tuition for the examinations of various professional accounting and secretarial bodies. A key feature of the early accounting profession in Australia was the proliferation of various state-based (professional) bodies. It is generally acknowledged that the Adelaide Society of Accountants, established in 1885, was the earliest professional accounting body in Australia (Parker, 1961). Many other similar bodies were subsequently formed over the next four decades (Carnegie, 1993; Carnegie and Parker, 1999; Gavens, 1985; Parker, 1989). Their formation provided the founders with the opportunity to create and lead their own organizations (Brentnall, 1938; Brown, 1968), the geographical isolation of the country contributing to the rise in various state-based bodies.

More recently, other explanations have been identified as underlying their formation, including the perceived need to reflect the transfer of the British model of the accounting profession to Australia and elsewhere (Johnson, 1982; Johnson and Caygill 1971), as well as intra and inter-professional rivalries and alliances (Carnegie and Parker, 1999; Chua and Poullaos, 1993; Parker, 1989). Another explanation was the emergence of accountants as a distinct occupational group through the concept of social closure in the pursuit of professional standing to gain social and economic rewards (Larson, 1977). Through its institutional form, the accounting profession sought to achieve market control and exclude outsiders on the basis of specified credentials in Australia (Chua and Poullaos, 1998), and in other countries (Chua and Poullaos, 2002; Richardson, 1987; Walker, 1991; Willmott, 1986).

At the time, the various state-based professional bodies admitted foundation members on the basis of the professional positions that they held. In addition, they sought to establish themselves through the credentials required of future members; usually those related to the knowledge, qualifications and practical experience of applicants. In this context, a common practice was to set entrance requirements and an examination policy (Linn, 1996). The different accountancy bodies developed similar examination syllabi and conducted their own examinations. However, these professional bodies did not provide any tuition for their prescribed courses of study. A small number of students, combined with the tyranny of distance and slow industrial development, made such activities too costly in Australia. This is where private coaching colleges such as the AAC played a pivotal role. These colleges provided classes and correspondence tuition to those wanting to gain professional qualifications. They prepared students for the examinations and subsequent membership of the different professional bodies. Besides the private coaching colleges, a number of public accountants filled the demand for training facilities. This was evident in the advertisements published in the journals of The Commonwealth Institute of Accountants (CIA) and The Federal Institute of Accountants (FIA), which involved both public accountants and private coaching colleges (CIA, various years; FIA, various years).

As discussed earlier, at the time accounting was not recognized as an academic discipline; therefore, only limited tuition facilities were available in technical colleges and universities (Graham, 1978). Though the accounting discipline entered the university system in the early 1900s, the first full-time appointment in accounting was made at the University of Sydney only in 1952. The entry requirements for university degree programmes were higher than those needed to sit the examinations of professional bodies. Candidates could gain exemptions from the preliminary and final examinations depending on their level of secondary education and, if applicable, their tertiary education.

In this context, the 1940s was a turning point as it dealt with the issue of educational standards required to study and practise accounting professionally. During this period, the main concern was how well accountants could deal with a changing post-war business environment. This issue was raised both inside and outside the profession. In 1943, CB Harvey, President of the Institute of Chartered Accountants in Australia (hereafter the Institute), considered that it was necessary for the Institute to ensure future members would be adequately educated and trained to meet the expanding demands they would experience (Harvey, 1943: 108). This would require broadening the basis of education for members. In his personal view, educational standards needed to be raised, although this was not the Institute’s view (Harvey, 1943: 109).

Yorston objected to the proposals advanced by Harvey; an objection which could be perceived as a self-protection measure as they would have affected the operations of the AAC. Was it purely material self-interest or were there other factors that prompted Yorston’s objection? This question cannot be answered unequivocally, as human motivation is complex and multi-dimensional. Yorston contended that it was a matter for future development for which the time was not quite right. His objections were focused on the practical issues. He believed most people could neither achieve the educational levels required to attend university nor afford to undertake such studies (Yorston, Articles, 1944: 335). Yorston also argued that it was not the right time for such a change as it required that teaching materials be greatly increased; the technique of accounting was not yet unduly complicated but the number of people trained to teach accounting was strictly limited (Yorston, Articles, 1944: 337).

Secretarial practice and company law

Yorston made a significant contribution in this area through writing textbooks and journal articles. He edited Secretarial Review, a journal for students and practitioners, during his tenure at H&R. He relinquished the editorial role on leaving the firm, but still continued to write and publish articles on secretarial and legal matters. In his textbooks and journal articles, he was concerned with the need to keep abreast of current changes in legislation and legal practice. Yorston’s writings became a valuable reference for practitioners, as they were clear, comprehensive and thorough in coverage. He also wrote as a co-author with Edward Fortescue, a colleague from the AAC. Their first joint work was entitled Australian Secretarial Practice and Manual of Company Law. It was a continuation of earlier works on this subject matter by Barton, first published in 1911 (Barton, 1922). This text was welcomed as a great improvement on Barton’s work. It received a glowing review from John McInnes, the first President and a member of General Council of The Accountants and Secretaries Society. In his review, McInnes contended:

… in our opinion this work is the best Australian work on secretarial practice and company law intended for directors, secretaries and accountants. The very difficult task of writing a textbook to cover all states appears to us to have been more successfully accomplished in this work than in any other publication … (McInnes, 1936: 408)

The review by McInnes highlighted the difficulty faced by writers in their coverage of company law in Australia. With the formation of the Australian Federation, no provision was made for the Commonwealth to enact company legislation. As a consequence, each state enacted its own legislation, each differing in some respects from those of other states. Yorston’s ability to address the issues across states demonstrated his skill in writing for a broad, albeit specialist audience in law. While the text was deemed to be suitable for use across states, Yorston acknowledged the need to tailor it to the different audiences in different states. He co-authored company law texts that met the individual requirements of various states with continuing changes in legislation (Yorston and Brown, 1948; Yorston, Brown and Jackson, 1948). These texts were primarily written for students with the material drawn from public companies. These were welcomed by both practising accountants and company secretaries.

The teaching notes developed by Yorston and Fortescue became the basis for two more texts. Proprietary and Private Companies in Australia was published in 1937, and Australian Mercantile Law two years later in 1939. All of these texts were recommended by the various professional bodies. Australian Secretarial Practice and Manual of Company Law and Proprietary and Private Companies were listed as references on the subject of Company Law by the Federal Institute of Accountants and the same body listed Australian Mercantile Law for the subject with the same name as this text (FIA, 1948–52). A reviewer of these primers observed that Yorston’s work was “packed with valuable reference material and contained a comprehensive survey of secretarial duties” (Oliver, 1947: 240). Some of these texts were used overseas and several were adapted for use in New Zealand (Dale, 1958; Smyth, 1953).

The Yorston and Fortescue texts remained in demand for a number of years. Both men continued to work together on the revised editions of their works, although their accounting practice was dissolved in 1939. Fortescue formed his own practice and in 1954 joined Edwin Nixon and Co. He retired in 1973, shortly before the firm became Arthur Young and Co (Fortescue, 1976). With the departure of Fortescue, Yorston directed his energies full time to the AAC. Although the AAC prepared students for the examinations of all professional bodies, the majority of its students were undertaking the examinations of the Institute at the time. Overall, the number of students preparing for professional examinations continued to grow during the war and afterwards (Graham, 1978). The growing interest in accounting was also stimulated by the Federal Government’s attempts to provide employment opportunities for discharged servicemen. One initiative of the government involved the publication of a series of texts. These were designed to provide educational training and assist in the re-establishment of those people in civil occupations (Goldberg, 1980). Yorston was one of the authors selected, given his ability to write in a clear and non-technical manner.

Accounting

Yorston frequently gave guest lectures outside the AAC to accounting teachers and students. He was a popular speaker at the professional bodies’ student societies where he covered topics that were relevant to students’ examinations. Some of these lectures covered partnership accounting (Yorston, 1938) and consolidations (Yorston, 1942, Articles, 1947). These lectures were also made available to members of the profession. The subject of consolidated accounting was dealt with using practical examples. Yorston’s clear explanation of the relationship between a holding company, its subsidiaries and minority interests was particularly appreciated. In an expression of thanks, his lecture was described as illuminating in a complex area of accounting (Commonwealth Institute of Accountants, 1937–52: 1948).

A review of Yorston’s writings reveals that one of his major educational contributions was co-authoring with EE Fortescue, E Bryan Smyth and SR Brown. Their work culminated in a series of texts designed to meet the examination syllabi of the different accounting and secretarial professional bodies. Smyth was an accounting teacher at Sydney Technical College and later became the first full-time professor of accounting in Australia at the New South Wales Institute of Technology (now the University of New South Wales) (Carnegie and Williams, 2001: 108). Brown was a law graduate and practising chartered accountant in Sydney. The three authors knew each other through their membership of the professional accountancy bodies and the Australian Institute of Management. Their joint authorship was fostered by a desire to improve the quality of educational texts available, although they were not always necessarily in agreement on their work (Gillmore, 2008).

The Yorston, Smyth and Brown series appeared to face competition from two alternative texts, namely A Philosophy of Accounting and Intermediate Accounting. The former was written by Louis Goldberg and the latter by Alexander Fitzgerald. These were the other authors commissioned by The Commonwealth Institute of Accountants. Goldberg was a part-time lecturer in accounting at the University of Melbourne. His text, published in 1939, was the prize-winning entry in an essay competition conducted by the Commonwealth Institute of Accountants (Kerr and Clift, 1989: 1–2). Goldberg’s work was praised for its originality, logical development, systematic arrangement, style and language. On the basis of the award it would seem that Yorston’s work was perceived to be equal to Goldberg’s work in respect of these attributes. However, it was also found to be more student-oriented as worked examples were provided in the text. The second text, Intermediate Accounting was a collection edited by Fitzgerald. It comprised a series of topics; most of the chapters were written by the staff of the University of Melbourne.

All three texts were recommended for use in the bookkeeping and advanced accounting subjects for the Federal Institute of Accountants (FIA, 1948–52) and by the Commonwealth Institute of Accountants for the intermediate accounting subject (CIA, 1937–52). All three texts were important locally written foundational materials at the time. A comparison of the content of the three texts reveals that both the Goldberg and Fitzgerald texts were better grounded in theory than Yorston’s. However, Yorston’s work was enhanced by the inclusion of data selected from actual company reports. It also included more practical worked examples. Both the Fitzgerald and Yorston texts were written specifically for the intermediate accounting examinations but their scope and coverage permitted their use beyond this level of study. While the texts could be viewed as competing, in Goldberg’s view they were “in part competitive and in part complementary” (Goldberg, 1980: 32).

Until 1951, Yorston, Smyth and Brown had published texts on financial accounting. In this year, Yorston, Brown and Sainsbury wrote Costing Procedures, a text devoted to cost accounting procedures. Sainsbury was a company secretary at British Motor Company Pty Ltd and he was an experienced cost accountant. Their decision to write this text was explained in the Preface, where they stated: “this text is directed both to students and to practitioners whose experience has hitherto been mainly outside the costing field and who desire to refresh themselves on essentials” (Yorston, Sainsbury and Brown, 1951: iii). Their entry into this field of accounting broadened the coverage of their writings. However, there were existing Australian texts on this subject matter. Les Schumer’s Cost Accounting was first published in 1935. It was awarded first prize in the competition conducted by the Victorian branch of the Commonwealth Institute of Accountants in 1934 for a thesis on an accountancy subject (Anderson, 2002). This work became a prescribed text for the cost accounting subject examinations at the University of Melbourne and the Commonwealth Institute of Accountants (Commonwealth Institute of Accountants, 1937–52; University of Melbourne, 1936).

In 1944 Walter Scott, a management consultant, published his work entitled The Principles and Practice of Cost Accounting (Scott, 1944). Scott’s work was similar in content to that of Schumer’s. In addition, it included a lengthy appendix on munitions costing. While this material was important for costing wartime production in munitions annexes, it was perceived to be less relevant for students in the post-war environment. Yorston’s work replaced Schumer’s as a text and it was prescribed for Advanced Cost Accounting, a paper of the examination syllabus of the Australasian Institute of Cost Accountants (AICA, 1953). The Yorston text was deemed by the AICA to be superior to both those by Schumer and Scott, as it explained the cost concepts better and it contained more illustrations for students and practitioners.

Overall, the book reviews of Yorston’s works, and their subsequent editions, continued to remain positive. Many of these texts were adopted by the professional bodies, technical colleges and universities in both Australia and New Zealand for over two generations. Nine editions of Australian Secretarial Practice were published over the next 47 years. Australian Mercantile Law is still in print under the new title of Australian Commercial Law (Turner, 2010). Its 29th edition was published in 2010. Another classic, Accounting Fundamentals, was first published in 1949 and remained in print until 1991. Indeed, this is a testament to the enduring quality of works that Yorston had initiated.

Financial reporting

In his early writings Yorston had recognized that the information provided in annual reports was inadequate (Yorston, Books, 1946). He believed that annual reports prepared at the time were not properly demonstrating the contribution of business to society and, more importantly, shareholders and employees did not understand them. He continued what could be called his crusade for improved financial reporting through his writings and research lectures. In his pursuit of the ideal of informational equity between shareholders and employees, Yorston advocated additional voluntary disclosures by companies beyond those required by law at that time (Articles, 1960). He also wanted these disclosures in a manner that female shareholders and employees could understand. These ideas were considered radical and not viewed favourably by other accountants (Gillmore, 2008). However, he believed such voluntary disclosures were necessary to convince the investment community of the attractiveness of investment in Australian companies. He had recognized that full disclosure was necessary for the efficient functioning of the emerging Australian capital market. This initiative epitomizsed Yorston’s distinctive mix of pragmatism and idealism.

Reviews of current practices

In the first review lecture, delivered at the University of Sydney in 1951, Yorston (1951b) argued that financial statements presently published by companies did not meet the requirements of the different types of persons interested in the enterprise. He contended that the generic financial statements designed to meet the needs of all parties were outmoded. Furthermore, published financial statements needed to be made intelligible to various recipients through a simplified form of report. Yorston recommended a number of changes to financial statements. These included changes in the format of the funds statement; disclosure of turnover; a change in the format of the revenue statement; quarterly or half-yearly reports; a condensed funds statement devoid of accounting jargon; details of company activities such as changes in products, new plant installation; and the need for matters affecting the company to be covered in a narrative director’s report along the format suggested by the Controllership Foundation (Yorston, 1952: 49–50). It is important to note that many of the aforementioned changes have since been implemented in the financial reporting process over the years.

Stakeholder concerns

From a reading of the corporate social and environmental literature, it seems that the stakeholder concept has been gaining prominence over the last two decades. In the Yorston era, broader stakeholder concerns were conspicuously absent both in theory and in practice. It was only the shareholders who were perceived as a group with something at stake. In his research lectures, Yorston identified a number of other parties, besides shareholders, who were stakeholders and who could be interested in the company’s affairs. These parties included: employees, customers, suppliers of materials, dealers, the government and the public in general (Yorston, Articles, 1955: 243). He selected employees as a group having a moral stake or claim in the organization in which they work. He claimed that the information supplied in annual reports did not meet their needs. He further stated that the financial statements meant nothing to the average employee who lacked any understanding of accountants’ language. Early in his career, Yorston was an advocate of cooperation between employees and employers. He held the view that most of the allegations against the corporate system were made because of a lack of knowledge of the facts (Yorston, 1952: 51). He believed that improved financial reporting would serve to enhance communication and improve employer–employee relationships.

In 1952, Yorston conducted a pioneering study of the employees’ views on the financial statements of their employer – Jantzen (Australia) Limited in this instance. This study found that nearly all employees stated that they saw the annual financial statements of their employer, and a large proportion read them. However, less than half of the employees indicated that they understood the reports (Yorston, 1952: 51). This study also found that employees would have liked further disclosures and explanations in the annual report (Yorston, 1952: 52). This confirmed Yorston’s view that financial statements needed to be simplified and be free of jargon.

Corporate governance concerns

In 1953, Yorston gave another research lecture, entitled ‘Control in the Corporation’. In this lecture, he questioned who really owned and controlled Australian companies. His primary concern was shareholders’ ability, or a lack thereof, in controlling the activities of directors. He believed that while shareholders were the owners of a company in theory, they did not exercise any ownership rights in practice, as they did not enquire into the company’s management. Yorston believed that as the managerial revolution proceeded further in Australia, a clearer distinction needed to be made between the powers of the Board of Directors and the Management (as distinct from the Board). The subsequent changes in corporate law have served to validate Yorston’s farsightedness in this context.

The second part of the lecture reported the findings of an empirical study on shareholders’ opinions on annual reports. Shareholders of two companies were sampled and 523 replies were received out of 3,200 approached. The findings were reported for each company. Overall, over 90 per cent of respondents claimed that they understood the accounting terminology (e.g., working capital, authorized capital and current assets), although these results contradicted the other findings of the study (that little more than 50 per cent of respondents claimed they understood the financial section of the annual report). Yorston expressed reservations about these contradictory, perhaps confused, responses as an accurate reflection of respondents’ understanding (Yorston, Articles, 1955: 297).

The study also found that a majority of respondents would have liked a report of the proceedings of the annual general meeting (AGM) after it had been held. Also, many shareholders stated they were unable to attend the AGMs due to work and other commitments, while others felt there was no need as the directors gave little additional information (Yorston, Articles, 1955). In general, the respondents indicated their desire for additional information to be included in the annual report. The desired information included: pictures of company premises and products; more (information) on products; a brief report on future prospects; turnover; number of employees; number and names of subsidiary companies and taxable income (Yorston, Articles, 1955: 296). This study revealed the novel demands of the shareholders at the time. Over the years, many of these items have become routine disclosures in Australian annual reports.

Corporate accountability concerns

The gap between ownership and control is a classic corporate governance issue. In the mid-1950s, Yorston had identified the growing gap between ownership and control, and he made attempts to bridge this gap. He recommended the institution of a “Shareholder Relations Program” designed to maintain the confidence and cooperation of existing shareholders and the interest of potential investors. The programme required: a letter of welcome to new members; post-meeting advice to members; information bulletins; commemorative brochures; shareholder correspondence; and personal contact. However, it was the annual report that was the main vehicle which could express the shareholder relations programme and demonstrate corporate accountability. Yorston believed that the annual report should contain, in addition to the usual requirements, the following:

A company letter or statement signed by the president or chairman of the Board, which explains the accomplishments of the company in the past year and gives the prospect for the future as management sees it. It discloses additional information on the company’s products, sales, dividends, research and development expenditure. In attempting to achieve the above, comparative financial statements should be provided, and the terminology of the financial statements must be such that the average investor will understand it. Early in the report a highlights page should be included which summarised the main results for the year. To aid understanding of the financial statements, somewhere in the annual report (it usually appears in the directors’ report) should be, in narrative form, an explanation of the financial statements. This will be directed to those who do not readily understand financial statements. It will explain the operating results, financial position, trends in finances and similar matters. The turnover of the company should be disclosed, for without it many important ratios are meaningless. Accompanying the usual financial statements should be a statement showing the source and disposition of funds. Further, an analysis of shareholdings indicating the number of holdings, graded according to numbers of shares held, is desirable.

Illustrations of the products or services of the company, plant, directorate, staff, etc., add interest to the report. Pictures should be shown without too much extraneous background and not too many on the one page. Pictures should be with people rather than of things alone. The annual report should disclose both the income and dividend figures on a per share basis. (Yorston, Articles, 1955: 300–301)

The above recommendations demonstrated Yorston’s foresight in financial reporting, and many of these are now required disclosures within the present regulatory environment.

The composition of boards of directors

The composition of the board is another classic corporate governance issue. In 1955, Yorston gave the Biennial Lecture of the Australian Society of Accountants at the University of Western Australia (1955b), the first part of which provided an overview of the historical development of companies and legislation in Australia. Yorston then revisited the theme of the growth in size of companies leading to separation of ownership and control. Refocusing on the control exercised by directors, Yorston contended that many directors were not aware of when they were acting as directors and when they were acting as management. They were also unaware of the fact that power, control and active leadership resided in them as management. He observed that little attempt had been made in Australia to give attention to the problems inherent in the composition of a Board of Directors, particularly the need for directors to think and act independently. He believed the individual companies and the economy as a whole would benefit from a study of the desirable attributes of Boards of Directors.

In light of the growth of management combined with the spread of share ownership, Yorston explored the Board of Directors issue empirically. He reviewed the reports of 340 Australian companies, out of a total of 770, listed on the Sydney Stock Exchange. The average size for a Board (of Directors) was found to be five. The survey determined that only a few directors had a substantial financial interest in their companies. In terms of the composition of a Board of Directors, the relevant factors were found to be: the size, representation of various interest groups, age, and desirability or otherwise of directors having large shareholding, how to recruit new directors and what are desirable qualities of board members. He again stressed the issue of independence of full-time executive directors. External directors, he believed, would be independent in their judgement of board matters and this would benefit a company. He expressed his concern that this exploratory survey also found that only seven companies (2%) had a female director. In his view, this situation needed to be rectified. Both of these last two matters are still issues of concern in the contemporary environment. However, some progress has been made in terms of having female directors on the boards of Australian companies. According to the Australian Institute of Company Directors (2012), the percentage of women on boards of ASX 200 companies increased significantly in 2010 and 2011. It tracks new appointments on a real-time basis and in June 2012, the percentage of women on ASX 200 boards stood at 14.4 per cent.

Disclosure in the annual report

The issue of improved financial reporting was the theme of the Edgar Sabine Memorial Lecture given in 1959 in which Yorston continued his rather unwavering campaign for improved financial reporting. He believed this could only be achieved by greater disclosure of essential information, which would assist in assessing future performance. He reiterated that disclosure enforced by statute represented only a minimum level of reporting and that the profession needed to move to a “maximum” level of disclosure. He argued in support of clearer and more consistent explanations coupled with greater uniformity in preparation, and greater disclosure of essential information (Yorston, 1959: 509). Shareholders desired to know more about the company, so further disclosures were needed (along the lines of the matters expressed in the quotation above). Some of the items had emerged out of the criticisms of annual reports made by Yorston as an adjudicator for the Annual Report Awards (Yorston, 1959: 508–509). He concluded the lecture by acknowledging that making the annual report useful to those without accounting knowledge may seem an impossible task, but it was necessary to preserve the private enterprise system (Yorston, 1959: 513).

In the 20th annual research lecture of the Australian Society of Accountants (now CPA Australia) at the University of Melbourne in 1959, Yorston discussed the issue of Reporting Financial Information to Employees. In this lecture, he extended the notion of accountability in reporting to employees. He argued that while there were no legal requirements in this area, accountants had a moral obligation to act in the interests of employees as well as shareholders. In Yorston’s view, the employees’ livelihood was affected by the progress or retrogression of their employer. Therefore, they needed to be informed about the financial progress and position of their employer. He did not discuss the issue in terms of any class of employees and he did not support any reporting initiative that would foster a sense of class consciousness. He urged the profession to fulfil its moral obligation to the general workforce. This meant keeping them informed about the financial condition of their employer in order to alleviate their uncertainty (Yorston, Articles, 1960: 82).

Yorston surveyed Australian companies and he “communicated with some dozens of business friends overseas” to explore the different methods of giving information to employees (Yorston, Articles, 1960: 85). In light of his research, Yorston recommended a simplified report devoid of accounting jargon for employees. He also indicated the need for the report to include, in addition to information normally provided: thanks and tributes to employees; mention of special achievements; length of service of employees news and photos; and total payments to employees and what share of revenue they were getting compared with shareholders, taxation authorities and other interests. The overall purpose of supplying financial information to the employees would be to make them feel that they were part of the company and to help them identify their interests with the company’s continuing success (Yorston, Articles, 1960: 86–7). It is believed that he supported such initiatives not from any interest in promoting employee groups or trade unions; rather, he maintained that, “Surely on moral grounds the holder of one hundred five pound shares in a company is not of more consideration to the management than an employee who may give years of his labour, and in some cases, his whole working life to the company” (Yorston, Articles, 1960: 82). Indeed, he had a humanistic approach to the employee reporting issue.

Research in accounting

Research in accounting was another issue that concerned Yorston. In his 1962 lecture, he reviewed the various pronouncements, bulletins and material issued by the Australian accounting bodies (Yorston, 1962). He argued that practising accountants lacked the academic background to develop basic concepts and principles of accounting. He believed that universities had not actively engaged in establishing the basis of accounting thought. This is both interesting and surprising. In expressing this belief, he was acknowledging the need for laying the theoretical “foundations” for accounting and that universities should be engaged in research to this end. In his persistent critique of financial reporting practices he seemed to argue for “quantity” and (other than language) ignored the “quality” issue that academic researchers such as Chambers and Goldberg were concerned with. ⁸ To resolve this situation, his view was that the two accounting professional bodies should join forces and employ full-time research staff. This resonated with the ongoing discussions in the profession at that time which ultimately led to the formation of the Australian Accounting Research Foundation in 1966 (Burrows, 1996).

Yorston addressed the delegates at the New Delhi Confederation of Asian and Pacific Accountants in 1965. Here, he revisited some classic corporate governance issues and the interrelated history of accounting and corporate law. Then, given the audience, he reiterated the responsibility of the accounting profession to improve financial reporting. Yorston was aware of the subjectivity in accounting practices. He identified the “imperfections” of financial statements, emphasizing that they were expressions of opinion and judgement. ⁹ They were prepared in technical accounting language, which (to the majority of readers) made financial reports no more informative than a medical doctor’s prescription is to the layperson. He concluded that the profession had many challenges to meet, “we have much to do in order to make our service profession indispensable to the business and general community” (Yorston, 1965b: 7). In 1971, in an address to the graduates of Prahran College of Advanced Education (now Deakin University), Yorston urged them to prepare better and more informative financial statements. Yorston was acutely aware of the socially constructed nature of accounting. He believed that accountants in the future would be concerned with societal and environmental change; be able to adopt a global outlook, and also embrace changing technology (Yorston, 1971).

During the 1970s managed capitalism collapsed and in the 1980s a new orthodoxy emerged (Fulcher, 2004). A neo-liberal model of capitalism became intellectually and ideologically dominant in Australia and in other advanced economies. Inevitably, the state of accounting education and professional practice changed in this model. From the vantage point of the twenty-first century, it is now evident that many of Yorston’s ideas have been accepted in accounting education and practice. These include, for example, the idea of the social responsibility of the accounting profession and the stakeholder orientation of accounting reports. These topics are now included in most Australian accounting texts. The accounting profession, both the Institute and CPA Australia, has also embraced these ideas but have they been realized in practice? This remains an issue of concern. A recent history of corporate scandals and the involvement of respected accounting firms in those scandals suggests that the accounting profession has had problems in fulfilling its social responsibilities. ¹⁰

Professional activities

Yorston’s contribution to the accounting profession extended beyond his research lectures, writings and teaching. In 1955 he was elected to the New South Wales Divisional Council of the Australian Society of Accountants. He was in this position for eight years. He served on various committees, including Accounting Research, Library and Education, Company Law, Disciplinary and Public Relations. He was elected Vice-President in 1957 and became President two years later. He served on General Council committees too (News and Notes, 1979: 666–667) and represented the Australian accounting profession at the seventh and eighth International Congresses of Accountants in Amsterdam in 1957 and Paris in 1962.

Community involvement

Despite his professional engagements and the demands of the AAC, Yorston found time to remain involved in community-based activities. This was through his service to his church and his involvement with cultural, religious and political organizations. For instance, Yorston was involved with the Australian American Association (AAA hereafter). The AAA was established to maintain and develop friendship, mutual understanding and cooperation between peoples of the two countries. In the NSW branch, he held the positions of Honorary Treasurer, first Chairman of the Council and President (1957–63, 1965–74). Federally, he served as President (1960, 1962–64, 1966–67, 1972) and Council Member. He founded the Junior Association in Sydney in 1958, and the Canberra and Hobart Branches of the Association in 1962 and 1963.

Yorston was also responsible for the introduction of the American Field Service (AFS hereafter) programme to Australia in 1959; it was a bilateral student exchange programme between the two countries. He was instrumental in having the AFS incorporated within the activities and administration of the AAA. He became the National Patron of the Association of American Field Scholarships in 1976 and remained actively involved with this Association until his death, demonstrating his contribution to maintaining cordial relations between the two countries. The field programme was a means of ensuring that future generations were nurtured to maintain a good relationship. Reverend McKay (1983) recognized Yorston’s contribution to this programme posthumously. From the AAC to the AFS, his church remained a constant in Yorston’s life. He remained actively involved in its educational, health and general administrative tasks.

National honours

Away from these activities, Yorston was a keen surfer and gardener. He was 180cm in height and always looked distinguished with bushy eyebrows and a neatly clipped moustache. He received the award of Officer of the British Empire for services to the AAA in 1960 and a knighthood was conferred three years later for services to the profession and community. With this knighthood, Yorston joined an illustrious group of accountants including Alexander Fitzgerald (a partner in the accounting practice of Fitzgerald, Gunn and Partners), Management Accountant and Consultant Walter Scott, and Ronald Irish (a former senior partner in the chartered accounting firm of Irish, Young and Outhwaite). In common with Fitzgerald and Irish, Yorston held the position of president of the Australian Society of Accountants, but unlike Fitzgerald and Irish he was not a partner in a large accounting practice. Furthermore, Fitzgerald was affiliated with the University of Melbourne, and he was active in promoting the accounting discipline to university degree level. Fitzgerald also served on numerous State and Federal Government committees in times of both war and peace. Both Scott and Irish were members of important government committees in the post-Second-World-War period. In this regard, the basis of Yorston’s knighthood for community service was quite different from those awarded to Fitzgerald, Scott and Irish. From the 1970s Yorston suffered from skin cancer and was hampered by illness. He died of Parkinson’s disease in 1983. He was survived by his wife and children. Lady Yorston died in 1995.