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 measure of insurance payable as consequential damages for the interruption of a

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 several 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

value of the services of a lawyer or a doctor, and if they were not fully informed as to where they could on short notice secure the services of a lawyer or a doctor, I believe lawyers and doctors to-day would be doing the thing that they deprecate in other professions. It has been stated a number of times that not more than 10 per cent. of the financial business of the country passes under the review of professional accountants. I therefore think that as accountants individually, and as the American Association of Accountants we should carry on the education of the public to the value of the services of accountants until a larger proportion of business men appreciate what can be done for them; until the man of affairs feels the necessity of retaining an accountant just as he retains his lawyer. I am just as much opposed to promiscuous advertising, and calling attention to particular firms and individual accountants in an undignified way as anybody else. I think that it might be better for the American Association to do the necessary advertising, for in view of the fact that so large a portion of the business interests of the country are totally unaware of the value of accountants' services, we should not dismiss the subject by simply saying that advertising is undignified and unprofessional. Even Mr. Sterrett in his paper at one poin speaks of the profession of accountancy being on the threshold of a great future; from this one must infer that the public has not had time to be informed, and yet we are told we must stop advertising of any kind whatever and yield to a slow but dignified growth. I do not think that this is expedient but that it is a matter which might engage our attention further.

Now just a word with respect to Mr. Sterrett's treatment of the matter of contingent fees. He treats the subject in an admirable way. I think, however, that if we as accountants were to adopt a rule such as Mr. Cooper suggests the taking of a contingent fee by any one would soon have to be abolished, and I am therefore against the adoption of such a rule. The point that Mr. Cooper makes is that the client might persuade the accountant to sign a dishonest certificate in cases where the latter is interested in the results. That is true, but we must remember that a man who would sign a dishonest certificate for a contingent fee would be just as likely to sign a dishonest certificate in any other transaction for a fixed fee. A number of instances could be cited to show that professional services by accountants have been rendered upon

some sort of a contingent basis and about which there could be no question as to ethical principles. We would make a mistake in the adoption of any rule which would attempt to abolish all contingent fees without exception.

The next point relates to the Code of Ethics. To whom is. this code directed and to whom should it really apply? We cannot apply it to the members of the American Association, for what is the use in having a rule with a penalty, unless the penalty can be enforced. The only penalty of any practical effect is one which would deprive a man from making a living in his profession. To accomplish this we must have the authority and power of the State, and until the State recognizes accountancy as a profession, as it does law and medicine, no code of ethics can be anything else than a theory. I believe the States should pass some sort of restrictive legislation, such as now applies to the law and to medicine, providing that all accountancy work of a public character must be performed by registered or certified accountants, and I believe in this matter that we would have the public back of us and that the opposition would be weak. It has been talked of before; our friends in Ohio took it up years ago and put it up to their legislators to pass such a law. I believe the certified public accountant law should come first in those States where there is no such law in existence. I believe the American Association should plan a campaign looking toward the restricting of public accounting work to public accountants or certified public accountants. In some states where they have no such laws it might cause confusion, and it might be urged that it would be impossible to put it through, because there are accountants in practice in those states who are not certified public accountants. I believe the condition could be met very easily. In some of the larger states, such as New York and Pennsylvania, I believe it would be possible to get the legislature to pass laws, providing that within a period of say six months all public accountants in practice must secure a certificate. Those who had C. P. A. certificates would be registered as a matter of course, while those practicing as public accountants would be required to prove their fitness. If we could have such a law in our states the shyster could and would be deprived of his right to practice, he would be deprived of his livelihood, and we would then be established as a profession.