Reviewed by Joni Young Temple University

This book provides a useful history of the American Insti-tute of Accountants (AIA) and conveys the early conflicts and reactions of various accounting organizations and individuals within these organizations. Conflicts occurred between practi-tioners in large and small firms, between practitioners in differ-ent geographic areas and between the AIA and academicans. The book is divided into four sections that trace the history of the AIA from its beginnings as the American Association of Public Accountants (AAPA) in 1886 to its primacy in 1940.

Section 1, 1886 to 1906, explores the “dawn” of the profes-sional organization. This section emphasizes the divisions within the “profession” and the absence of an authority focus. The author contrasts the opinions of two contending professional organizations, the New York Institute of Accountants (NYIA) and the AAPA, on issues such as whether accounting was an art or science, the appropriate means of training new entrants, possible responses to the influx of non-Anglo-Saxons into accounting, and the importance of professional designa-tions. Miranti examines the different perspectives of the AAPA and NYIA leaders in an effort to understand these influences upon their opinions. However, this section tends to over-emphasize the differences and under-emphasize the similarity of views among these accountants. Both AAPA and NYIA members believed that accounting was useful in improving society. C. W. Haskins, an NYIA leader, believed that accounting “could help to perfect society by promoting efficiency and honesty” [p. 37]. AAPA leaders also believed that accounting “offered great potential for social uplift…” [p. 39]. With respect to attitudes about training, the text provides more evidence of diversity within the AAPA than of diversity between the AAPA and NYIA.

Section 2, 1900 to 1916, details the continuing search for professional roles. The AAPA leadership employed the Journal of Accountancy to promote its professional ideals and views on the roles of accountants. Miranti employs four brief case studies to illustrate this search for identity and purpose. The first study emphasizes auditing and the efforts to require annual audits for New York insurance companies. The second emphasizes ac-counting and the sporadic involvement of the AAPA in the pub-lic debate about railroad accounting. The third emphasizes con-sulting and the role of an AAPA committee in advising a govern-ment committee on Treasury Department bookkeeping proce-dures. The fourth emphasizes income taxes and the efforts of the AAPA to gain government acceptance of accrual accounting.

Section 3, 1917 to 1929, considers the encroachments of the Federal Reserve Board and the Federal Trade Commission in financial reporting and details the continued division of the profession over proper examinations for new entrants, adequate licensing requirements, ethics rules and “proper” accounting. The successful efforts of the AIA leadership in obtaining the AIA prohibition against “touting” drove many small practitioners and others to form a rival organization, the American Society of Certified Public Accountants (ASCPA). During this period, criticisms about the quality of attest work underscored the lack of agreement among accountants about the classification of attestations and the responsibilities of accountants in undertaking this work. The American Association of University Instructors in Accounting (AAUIA) drew attention to the inconsistent applica-tion of accounting methods — a condition that practicing ac-countants were unwilling to change for fear of eliminating the need for professional judgment.

Section 4, 1929 to 1940, examines the emergence of the Securities Acts and explores the coming together of the public accounting profession into a single representative organization — the AIA. Although the AIA played little role in the events culminating in the passage of securities legislation, its members and all public accountants were forced to increase their level of independence from clients [p. 153] and to consider developing accounting guidance to establish “authoritative support”. The AIA responded to an AAUIA challenge by establishing a committee to provide guidance on financial accounting matters. These challenges by the AAUIA and the changes wrought by the Securities Acts and the SEC played a significant role in facilitating the AIA merger with the ASCPA.
Miranti discusses the “politically incorrect” attitudes of the early leaders of the AIA and the role of these attitudes in delay-ing the AIA merger with the ASCPA. In his discussion of this merger and in other sections, he describes the racist/sexist atti-tudes of the AIA leadership and their concern to allow only the “right men” of the “right” social background into the partner-ships of major firms and the inner circle of the AIA [e.g., p. 126, pp. 169-171, p. 180].

A major concern with the book is the lack of clear purpose in its opening chapters. In the final chapter, the reader learns that the author’s purpose is to write a history of the AIA: “this study of the history of the AIA also casts some new light…” [p. 190]. In contrast, the author discusses professions generally and cites histories of professions such as engineering and medicine rather than histories of professional organizations in the introductory chapter. This chapter suggests that the book would develop a history of the profession rather than a history of a professional organization, a very different historical focus. This confusion over focus leads to questions that otherwise might have been avoided: Why did the author not discuss in more detail the activities of the ASCPA and other organizations and their contribution to defining the roles of the auditor and accounting? Why did the author limit accounting professional to the public accounting professional? Given the emphasis on public accounting, why did the author not examine in more detail the changing role of the auditor in society and whether the significance and purpose of audits changed during the period studied?

The frequent use of the term “elite” throughout the text creates confusion for the reader. At times, the term refers to the partners in national firms [e.g., p. 111]. At other times, the term refers to nonaccounting groups such as the Department of Com-merce Advisory and Planning Council [p. 167]. At still other times, the term refers to the leadership within the AIA or to immigrant British chartered accountants [p. 180]. A consistent use of the term would have reduced this confusion.

The book conveys the many obstacles to establishing and maintaining one professional organization to represent the pro-fession. The issues discussed in the book continue to reappear as subjects of current debates. For example, what should be the entry requirements for new CPA (150 hour education requirement)? What is the purpose of the audit (does it include an obligation to detect fraud)? An examination of the influence of social values in the past upon the compromises and solutions reached by the AIA suggests the need to carefully consider the contribution and impact of social values to current and future changes in the public accounting profession (and other elements of accounting).