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such examinations finds that, during the period under consideration, abnormal conditions have affected the revenues, or that the habitual routine of the plant has tended to excessive conservatism in the book valuation of the tangible or plant assets, which it is his duty to provide for in the preparation of his findings.

It is not to be denied that a large number of the industrial consolidations so far effected have an element of fiction in their make-up; a fact attributable to the spirit of hazard or venture in times of prosperity among our financial and commercial classes ; this cannot be regarded as a permanently sustained condition, as is evidenced by the frequent instances of such deals that have failed of consummation at the crucial moment, that is, when the time for determining the relative or proportionate values of the respective properties is reached, aside from such sum of the ultimate capitalization as may be allotted for promotion and underwriting charges.

The special examination and report by an accountant in such propositions, supplemented when necessary by the physical appraiser, is the only safe basis for consolidating commercial plants.

The accountant is, first a synthesist, whose comprehensive estimate of an enterprise has material weight in determining the investment, and who then takes the property into consideration for the purpose of arranging the modus operandi of the routine best adapted from an utilitarian and economical standpoint to effect the ultimate purposes of the investment; and, secondly, is an analyst to take charge of the interest of clients in case of misapplication of the means, perversion of the proceeds, adjustment of assets in case of loss, justifying the book conditions in case of sale, or in maintaining the equities between partners, and so forth.

He may, as the result of his analyses, upset the stated condition of the auditor or bookkeeper; his exceptions to the value of assets might, for the first time, give the proprietors of a going business a modified opinion as to their worth, inventories may need revision, obsolete implements or out-of-date merchandise may have been bolstered up for the sake of maintaining the credit of a department manager; favored debtors may have been nursed at their face value without proper reserve to meet the loss; the practice of competitors may have made book assets

worthless; the absence of modern methods of operation may have placed the plant at such a disadvantage that the sheriff would be the residuary legatee of the business unless a reformation be effected.

In some conditions the assets are staple and their values beyond peradventure, in others, prices are mercurial, and as a consequence of this managers are prone to claim the most favorable tariff to meet their standpoint, whatever it be; then there is the peculiar class known as expiring, wasting or consuming assets, such as lease-holds, stumpage, patents, mines, etc., and, in some concerns, largely of a professional character, such as the practice of law, or in royalties, the current assets are to an extent memoranda only, until realized upon. Investment assets, such as subordinate, or by-product companies, branches, stocks or working contracts, may conceal much when stated in the abstract only, and weaken the life of any prosperous concern, and their intrinsic value be undiscovered for years under ordinary conditions.

And when the “ liability” side is considered, the force of habit is shown in the disregard of the accrued floating liabilities of a heavy and disagreeable character; such as interest on debts, assessments, taxes, unpaid wages, and burdensome contracts, which if duly considered up to the date of accounting would have materially changed the first impression of trading results.

Then an accountant's wide experience in treating reserve accounts to cover extraordinary wear and tear of machinery, equipment, rolling and live stock (a subject upon which there is such a diversity of opinion), also in meeting the contingency of bad or doubtful accounts receivable, is of much importance. Unless due provision under competent advice is regularly made, the business man is simply deceiving himself with a fanciful array of figures that encourages him to withdraw profits which are in fact either capital or what may be termed “planted income.”

In showing the returns and stated conditions for investment he must go deep enough into the results to be able to discriminate between results had under normal conditions and such as may have been caused by evanescent circumstances, such as "booms," so called, expositions, temporary control of an extra market, exceptional contracts, and so forth.

In point of fact, the public accountant may be designated as a business surveyor, or scrutineer, who goes behind the recorded data, reads between the lines, views the entire business situation, studies the physical facts, determines the element of personality, and how far it is, or may have been, a material element in effecting the results obtained; a judge of men and methods, tactful and discreet as a diplomat, logically apt in deductions, an exact recorder and fair forecaster, and at all times scrupulously honest and actuated by a strict reserve in the affairs of his clients.

The retained accountant should always be his client's best counsellor.

It is apparent also that where matters of so much weight are entrusted to him he must be sufficiently familiar with commercial law to enable him to act in unison with his client's solicitors, wherever necessary.

The accountant should be prepared to draw client's attention to any act done, or left undone, in disregard, or violation, or in excess of their charter rights, known more particularly as “ ultra vires." He should have some familiarity with the law of contracts, partnerships, agency, exchange, real estate, franchises, taxes, probate, and the current commercial and banking decisions.

To be an effective right hand to the legal fraternity in chancery proceedings relating to the complications of partnerships, trustee and estate accounts, and in protection of rights of creditors in bankruptcy proceedings, he must not only be all this, but he must above all so shape his course in the investigations, reports, and testimony, as to impress the court and litigants that the deductions made, and findings reported by him as the result of his examinations are clear and conclusive, arrived at mainly from the elements of books, documents, and other material examined, and are not theoretical conclusions as the result of bias, prejudice, preference, or jugglery.

There are two other very essential features in which the practitioner of broad experience and well-poised faculties is a desideratum. One is in calculations from which to determine the damages to a "going concern" in "use and occupancy” by condemnation proceedings under the exercise of eminent domain. The other is somewhat similar, being the ineasure of insurance payable as consequential damages for the interruption of a

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going business from fire, under a use and occupancy policy.

In addition to these, there may arise the question of consequential damages to a business man from personal injury, and the necessary incapacity for the time being; the basis for determination being the average income of the plaintiff.

In course of time the business world, the banking and investing public, the trustees of estates, and all who fully realize the weight of their responsibilities and the necessity for making full use of every available and legitimate means of being informed as to the character of investments, be they ever so small, will insist that every prospectus, announcement, or advertisement by which they are invited to participate in a venture shall have a full certified copy of the accountant's report embodied therein, and will disregard any prospectus that does not contain this essential feature over the signature of some well-known established practitioner.

As an incident of the indicated growth of appreciation of our work it is worth mentioning that the bankers of one of our Western States have recently resolved that preferred rates be given only to those borrowers who periodically file statements certified by established practicing public accountants.

It is not possible in these days of huge corporate industries, where inherited wealth is largely in the form of shares or bonds (that relatively are of a size that do not warrant the expense and time necessary for individual examination), to find a more satisfactory guarantee than the certified statement of an impartial examiner who depends for his practice and standing in the commercial world upon the absolute integrity and good faith of his certificate.

And it is within the probabilities that the public stock exchanges may insist upon this feature as a prerequisite to registration of stocks or bonds of a corporation that is seeking the benefit of the bourse, and that every annual or semi-annual statement of affairs, duly certified by a public accountant, shall be filed with the Secretary of the Exchange. There is also, from current indications, some reason to hope that the Federal Government in its control of interstate commerce may take measures in the way of amendments to present laws to make such periodical examinations by certified public accountants obligatory.

In older countries we find members of our profession appointed to high offices in the government-on royal commissions and committees upon amendments to commercial laws, county magistrates, receivers and referees in bankruptcy, arbitrators under court orders and trustees of landed estates.

May we not hope that in the course of time, as the members of this profession by their skill, judicial temperament, and strict adherence to the highest ethical precepts, establish themselves as an essential feature of the business progress of this country, they will be called upon to fill the posts of honor of a like character, and thus contribute to the welfare of our country, and, incidentally, in a measure repay the debt that we all owe to our profession?

Professional Ethics. Discussion by R. H. Montgomery, C. P. A., Pennsylvania.

I think it is proper for me to mention that the delegates from Pennsylvania are extremely proud to feel that Mr. Sterrett is a member of the Pennsylvania Institute of Certified Public Accountants and that he has written a paper which bids fair to become a classic. We are also proud to reflect that the accountancy situation in Pennsylvania is in good shape, and we feel that there are no “undesirable citizens " in the Pennsylvania Institute, or Mr. Sterrett would not be able to take so optimistic a view of the accountants' present position as is indicated by his address.

You have all read his paper and therefore I feel that it is hardly necessary in the few minutes allotted to me to attempt to review it. There are, however, a few points open to argument. There are one or two matters which claimed the attention of Mr. Cooper and Col. Allen, which in one sense are controversial and on which I would like to add a few words.

I want to refer in the first instance to the matter of advertising. One of the principal reasons urged against advertising by accountants is that it is unprofessional and that lawyers and doctors do not advertise. That statement is usually made without reflection, for lawyers and doctors have been advertising for seve'ral thousand years. If it were a fact that every one not only in business life, but in private life, were not fully informed as to the

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