Law Lib tompLaw T Sco848c 1910 UNIVERSITY OF CALIFORNIA LOS ANGELES LAW LIBRARY WISCONSIN LIBRARY COMMISSION ". LEGISLATIVE REFERENCE DEPARTMENT COMPARATIVE LEGISLATION BULLETTIN No. 22 LAURA SCOTT MADISON, WISCONSIN OCTOBER, 1910 CERTIFIED PUBLIC ACCOUNTANTS LAURA SCOTT n COMPARATIVE LEGISLATION BULLETIN No 22 OCTOBER. 1010 Prepared with the co-operation of the Political Science Department of the University of Wisconsin WISCONSIN LIBRARY COMMISSION LEGISLATIVE REFERENCE DEP'T MADISON, Wis. 1910 r CONTENTS PACK REFERENCES 3 HISTORY 7 LAWS 8 Foreign 8 United States 13 Citations to Laws 13 Boards of Accountancy 14 Number of Members 14 Length of Term 14 Appointive Power 14 Salary of Members 15 Qualification of Members 17 Powers of the Board 20 Certified Public Accountants 21 Qualifications 21 Examinations 26 Frequency 25 Public Notice 26 Scope 27 Waiver 29 Certificates 35 Issuance 35 Duration 35 Revocation 87 Fees 40 Penalties 41 SALIENT FEATURES 43 Methodsof Regulation 43 Apprenticeship 43 Examinations 43 Educational Qualifications 44 REFERENCES BROOKS JR., H. W. Province of the public accountant. Moody. Sept., 1908, Vol. 6. pp. 199-202. CANNON, JAMES G. The banker and the certified public ac- countant. Banking Law Journal, Oct., 1908, Vol. 25, pp. 811-815. CHASE, WILLIAM ARTHUR. Bankers and certified public ac- countants. 'Journal of Accountancy, Aug., 1908, Vol. 0, pp. 242-247. --- . The profession of a certified public accountant. Journal of Accountancy, July, 190C, Vol. 2, pp. 194-200. CLEVELAND, FREDERICK A. The scope of the profession of ac- countancy. Journal of Accountancy, Nov., 1905, Vol. 1, pp. 40-56. - . What may accountancy teach economics. Journal of Accountancy, Oct., 1906, vol. 2, pp. 401-419. DICKINSON, ARTHUR Lowas. The relations between the ac- countant and the banker. Journal of Accountancy, May, 1909, vol. 8, p. 55. . Duties and responsibilities of the public accountant with regard to new issues of stocks and bonds. Journal of Accountancy, Nov., 1905, vol. 1, pp. 16-27. DUNCAN, J. C. A definition of accounting. American Economic Quarterly. April, 1909, vol. 10, No. 1, pp. 75-84. GOODLOE, J. S. M. Should the practice of public accounting be limited to certified public accountants. Journal of Account- ancy, Dec., 1905, vol. 1, pp. 106-111. GREELEY, HAROLD DUDLEY. The new reciprocity of account- ancy and law. Law and Commerce, December, 1908, vol. 6, pp. 446-453. . Legal training for accountants. Law and Commerce, Nov., 1908, pp. 394-399. - - . Accountancy training for lawyers. Law and Com- merce, Oct., 1908, vol. 6, pp. 335-340. " 4 CERTIFIED PUBLIC ACCOUNTANTS HOGEWEG, G. P. J. Accountancy in Holland. Journal of Ac- countancy, Feb., 1908, vol. 5, pp. 308-311. KINLEY, DAVID. The field of accountancy. Journal of Ac- countancy, July, 1906, vol. 2, pp. 187-193. LAFRENTZ, F. W. Economic aspects of accounting and audit- ing. Journal of Accountancy, April, 1906, vol. 1, pp. 479- 486. Discusses accountancy as a profession. MOORHOUSE, ELI. Advantages of an independent continuous audit. Journal of accountancy, June, 1910, vol. 10, pp. 95- 100. Points out the growing necessity of professional audits by inde- pendent experts. NELSON, GODFREY N. Accounting as a skilled profession. Journal of Accountancy, July 1906, vol. 2, p. 201. NEW YORK. Violations of the C. P. A. Law. The Accountant, April 25, 1908, vol. 38, new series, p. 588. Contains a discussion ef violations of New York law from the Eng- lish standpoint. NEW ZEALAND. Accountancy in New Zealand. The Account- ant, Nov. 13, 1909, vol. 41, new series, p. 585. Criticises the New Zealand law. NEW ZEALAND. The New Zealand Society of Accountants. The Accountant, Sept. 17, 1910, new series, vol. 43, pp. 365-367. Professional accountancy and education. Journal of Account- ancy, Dec., 1907, vol. 5, pp. 119-133. (The) public accountant and publicity. Journal of Accountancy, Dec., 1905, vol. 1, pp. 136-138. RASTALL, B. M. and others. Round table on accounting; discus- sions. American Economic Quarterly, April, 1909, vol. 10, No. 1, pp. 97-104. Discussionof the relationship of accounting and economics. REID, J. L. A needed profession. North American Review, Oct., 1894, vol. 159, p. 510. RYAN, THOMAS P. The accountant in world affairs. Jounal of Accountancy, Nov., 1907, vol. 5, pp. 107-113. ROBERTS, GEORGE E. The public accountant and the banker. Journal of Accountancy, Nov., 1907, vol. 5, pp. 114-118. ROBERTS, WILLIAM H. The credit man and the public accoun- ant. Journal of Accountancy, April, 1906, vol. 1, pp. 465-474. STERRETT, J. E. The present position and probable develop ment of accountancy as a profession. American Economic Quarterly, April, 1909, vol. 10, No. 1, pp. 85-96. Education and training of a certified public account- ant. Journal of Accountanc}', Nov. 1905, vol. 1. pp. 1-15. CERTIFIED PUBLIC ACCOUNTANTS 5 . The profession of accountancy. The Annals of Amer- ican Academy, July, 1906, vol. 28, No. 1, pp. 16-27. Contains a history of the importance and complexity of accounts and the resultant necessity of professional accountants. SELLS, E. W. The accountant of 1917. Journal of Account- ancy, Feb., 1907, vol. 3, pp. 297-299, WALTON, SEYMOUR. Relation of the commercial lawyer to the certified public accountant. Journal of Accountancy, Jan. 1909, vol. 7, p. 205. WEBSTER, JR., NORMAL E. Prerequisites for accountancy prac- tice. Journal of Accountancy, Sept., 1908, vol. 6, pp. 338-340. WILKINSON, GEORGE. The accountancy profession in the United States. Journal of Accountancy, Sept., 1910, vol. 10, p. 339. HISTORY About sixty years ago Scotland regulated the profession of accountancy; England followed twenty-five yeals later; but not until 1896 was the profession of accountancy rec- ognized legally in the United States. New York was the first state to provide a law for conferring the title of "Certified Public Accountant". The demand for such leg- islation has gradually spread and several states at the- present time have laws regulating the certification of pub- lic accountants and the practicing of the profession of ac- countancy. LAWS FOREIGN Canada. Many of the provinces of Canada regulate ac- countants by chartering- the societies and regulating the admission thereto. See Ontario, 1905, No. 16; Saskatchewan, 1908, c. 55; 1909, c. 15. England. Accountants are regulated by chartering the societies. The Institute of Chartered Accountants in England and Wales was incorporated by royal charter OB llth May, 1880. It is in affect an amalgamation of several older societies of accountants, and the charter was given in recognition of the great and increasing import- ance of accountants, and in order to secure for the com- munity the existence of a class of persons well qualified to be employed in the responsible and difficult duties often devolving upon public accountants. The institute is a body corporate with perpetual succession, and is governed by a council of not more than forty-five members. The members are Fellows or Associates of the Institute, and are entitled to the use of the initials F. C. A. or A. C. A. They may not follow any business or occupation other 1 A bill has been introduced in England which requires registration of all persons practicing 1 as public accountants, and forbids other than registered persons to so practice. CERTIFIED PUBLIC ACCOUNTANTS 9 than that of a public accountant, or some business which, in the opinion of the council, is incident thereto or con- sistent therewith. As regards admission to the Institute, persons who have been for ten years continuously in prac- tice as public accountants need not pass examinations. But, with this exception, those who desire to be members of the Institute must generally be articled to a public ac- countant for a period varying, with the circumstances, from three to five years, and must pass certain examina- tions. The Society of Accountants and Auditors is a com- pany incorporated in 1885, under sec. 23 of the Companies Act, 1862, and is licensed by the Board of Trade to omit the word 'limited" from its title. No examination is necessary for the original members, nor need those who were in practice on the 31st of December, 1895, pass ex- aminations; in other cases, membership of the society is obtained only after examinations have been satisfactorily passed. Public accountants, public accountants' principal clerks, and official accountants in the employ of the gov- ernment, or of bankers, corporations, public bodies, or limited companies, are eligible for membership; account- ants' clerks may be student members of the society." "In England anybody has the right to become a public accountant, and many do so without having passed any ex- amination or without having become members of any so- ciety of accountants which confers qualifications. In addition to the Institute of Chartered Accountants in London there exist four bodies of accountants in the United Kingdom which have been incorporated under charter from the Crown, and whose members are conse- quently entitled to describe themselves as "chartered ac- countants" There is, in addition, the Society of Incor- 10 CERTIFIED PUBLIC ACCOUNTANTS porated Accountants and Auditors . . . who are know as "incorporated accountants." 1 And there are several minor societies which have been recently consti- tuted under the limited liability companies acts . . . The expression "certified public accountant" is not rec- ognized in England; but an injunction could be obtained against persons who attempt to describe themselves as chartered accountants" or "incorporated accountants" when they are not."" France. The accountant societies are chartered similar to the English System. The examinations are very strict. (jrerma/ty. In Germany accountants are sworn in be- fore a court of competent jurisdiction or other proper authority. The judges or officers determine whether or not the candidate is competent. The Chamber of Commerce requires candidates to pass an examination. JVew Foundland. The Institute of Accountants of New Foundland was incorporated by Act No. 16, 1905. New Zealand. A statutory body to provide for the training, examination and certification of accountants is established. Acts 1908, No. 211. Scotland. Chartered accountant is the professional designation used by accountants who are members of one or other of the three societies of accountants in Scot- land, which are incorporated by royal charter. These three societies are "the Society of Accountants in Edinburgh," which received its charter in 1854; "The Institute of Accountants and Actuaries in Glasgow," which received 1 Encyclopaedia of Laws of England, Vol. 1, p. 115. 8 Daily consular and trade reports, Sept. 19, 1910, p. 8 Ver/eichnis der Biicherrevisoren. CERTIFIED PUBLIC ACCOUNTANTS 11 its charter in 1855: and "The Society of Accountants in Aberdeen" which received its charter in 1867. The members of these three societies also use, for professional purposes, the initial letters "C. A." to represent the words "chartered accountant". While in the present state of the law it is open to any one who pleases to prac- tice in Scotland as an accountant, no one who is not a member of a chartered society is entitled to call himself a chartered accountant" or to use the letters ''C. A." as a professional designation (See Society of Accountants in Edinburgh, 1893, 20 R. 570). The ordinary method of admission to any one of these societies is by examination following upon apprenticeship to a chartered accountant. The three societies have a joint examining board. An apprentice, who must be at least seventeen years of age at the commencement of his apprenticeship is required to pass a preliminary examination in general knowledge, prior to within six months after the date of his indenture. A graduate of any university of the United Kingdom, however, or a person who has obtained the government school leaving-certificate, or who has passed an examination which in the opinion of the general examining board, is equivalent to the preliminary exami- nation, is exempt from that examination. After one year of the apprenticeship has been served, and at least one year before he presents himself for the final examination, the apprentice is required to pass an "intermediate exam- ination" in mathematics and professional knowledge, including bookkeeping. The final examination takes place after the term of apprenticeship has expired. Before presenting himself for it, the candidate must have attended a class of Scots law at a Scottish University, and such 12 CERTIFIED PUBLIC ACCOUNTANTS other classes as may be prescribed by the rules of the particular society which he wishes to join. The subjects of the final examination are the law of Scotland, the ele- ments of actual science and of political economy, and the general business of an accountant. The period of appren- ticeship which must be served is, in the cases of the Edin- burgh society and the Aberdeen society, five years, and in the case of the Glasgow institute four years. The Edin- burgh society exacts an apprenticeship fee of one hundred guineas, and an admission fee of one hundred guineas. The Glasgow institute has no apprenticeship fee, and the admission fee is fifty guineas. The Aberdeen society has an apprenticeship fee of twenty-five guineas, and an ad- mission fee of forty guineas. The Glasgow institute ad- mits as associates, persons who are training to become members. These associates must pass an examination and pay certain fees, upon which they are entitled to some of the privileges of the institute, but have no voice in the management or interest in the funds of the institute. The council of the Glasgow institute has also power to admit as members of the institute, in certain circumstances and upon certain conditions, accountants of good standing and of at least ten years' practice, without requiring them to serve an apprenticeship."' Transi-aal. The use of the title "Public Accountant" is restricted to those who are registered as public account- ants under the ordinance and incorporated into the Transvaal society of accountants. It provides i-ules for enabling a person entitled to be registered as a member of the society, including among them the 'Green's Encyclopaedia of Scots Law, Vol. 2, p. 407. CERTIFIED PUBLIC ACCOUNTANTS 13 members of any of the societies of accountants of England and Wales, Scotland and Ireland, whose mem- bership is declared to be sufficient by the by-laws of the society for the time being in force for admission into the society.' See Ordinances of 1904, No. Ill (Private) UNITED STATES Citation to L Utah. Theory of accounts, practical accounting, audit- ing 1 and commercial law. Virginia. Theory of accounts, practical accounting, au- diting and commercial law. Wiishinyton. Theory of accounts, practical accounting, auditing and commercial law. Waiver. The examination in the following cases is waived : California. Any person possessing the general qualifica- tions who shall have been practicing as a public account- ant on his own account for more than three years prior to the passage of the act, and who shall apply in writing for such certificate within one year thereafter. Colorado. Any person who files application within six months after the organization of the board, who has prac- ticed accounting for at least three years next preceding the date of his application the last year of which has been in Colorado, and files satisfactory proof of such fact. Any citizen of the United States, or who has declared such in- tentions, over twenty-one years of age, of good moral character, who has complied with the rules and regula- tions of the board and who holds a valid certificate issued by any other state, the United States or any foreign coun- try with substantially equivalent requirements, which ex- tends the same privilege. Connecticut. Any person holding a certificate granted by another state, who has had at least five years experience as a public accountant, who has practiced in Connecticut for at least one year on his own account, provided that state grants a similar privilege. Any person twenty-one years of age, of good moral character, applj T ing for the 30 CERTIFIED PUBLIC ACCOUNTANTS certificate within ninety days after the passage of the act who shall satisfactorily show to the board that he has had at least two years instruction in the office or by a reput- able public accountant in active practice in the state and has been engaged in the practice of public accountancy in the state for at least one year or has had such other equiv- alent experience as the board may determine. Florida. A lawful holder of a certified public account- ant certificate under the laws of another state which grants a similar privilege. A person possessing the general qualifications, who shall have been practicing on his own account as a public accountant for more than three years before the passage of the act, who shall apply for such certificate within a year thereafter. Georgia. Any person who shall have been practicing as a public accountant for the three years immediately pre- ceding the passage of the act who shall apply within three months thereafter. Illinois. The university may provide in their rules to waive all or any part of the examination of any applicant possessing the general qualifications, who shall have had five successive years experience as a public accountant pre- vious to the date of application; who shall apply within one year after the passage of the act and who shall have been practicing in Illinois on his own account as a public accountant for a period of not less than one year next pre- ceding the passage of the act. Any person who shall have been in the practice as a public accountant for not less than five years next prior to the passage of the act outside of the state of Illinois who shall have passed an examination in the opinion of the university of Illinois, CERTIFIED PUBLIC ACCOUNTANTS 31 equivalent to the examination held in Illinois. A holder of a Certified Public Accountant certificate from some other state. Louisiana. Any person possessing the general qualifica- tions and who has been actively employed as an account- ant or bookkeeper for not less than five years, who shall apply for a certificate and furnish an affidavit giving the names of his employers for the past five years, provided the application be filed within ninety days after the pas- sage of the act. Any person who has been for more than three consecutive years practicing as a public accountant in Louisiana on his own account, and who shall apply for such certificate within ninety days after the passage of the act. Maryland. Any person possessing the general qualifica- tions, who was at the time of the passage of the act prac- ticing in Maryland as a public accountant and who shall apply for a certificate within one year after the passage of the act. Michigan. Any applicant not later than 1906 who prac- ticed as a public accountant for more than one year prior to the passage of the act. Any certified public account- ant who holds a certificate issued under the laws of an- other state which extends a similar privilege. Minnesota. Any person possessing the general qualifica- tions, who is the holder of a certified public accountant certificate issued under the laws of another state which ex- tends a similar privilege to certified public accountants of Minnesota, providing the requirements are equivalent. Any person possessing the general qualifications who is the holder of a certified public accountant certificate issued 32 CERTIFIED PUBLIC ACCOUNTANTS under the laws of a foreign government, provided the re- quirements are equivalent. Any person possessing the general qualifications who for more than three consecutive years next preceding the passage of the act (April 22, 1909), has practiced in Minnesota as a public accountant on his own account and who shall apply in writing to the board for a certificate within six months after the passage of the act. Missouri. Any person of competent age, of good moral character, who has been engaged in reputable practice as a public accountant for a continuous period of three years, one of which shall have been in the state of Missouri, im- mediately preceding the passage of the act (June 10,. 190!)), or who has been employed as an accountant by a reputable firm of accountants for a continuous period of five years immediately preceding the passage of the act (June 10, 1909), one of which shall have been in the state of Missouri, and who shall apply to the board for a cer- tificate within six months after the taking effect of the act. Any person possessing a certificate from another state which provides similar registration and establishes as high a standard of qualifications as that required under the act. Montana. Upon recommendation of the board of ex- aminers, the university may waive examination for any person a citizen of tl^e Unitsd States or having declared his intentions af becoming a resident of the state of Mon- tana or maintaining a regular place of business therein, in the following cases: Holders of certified public account- ant certificates issued under the laws of another state which extends a like privilege, provided the requirements CERTIFIED PUBLIC ACCOUNTANTS in the opinion of the board are equivalent. Holders of certified public accountant certificates or the equivalent issued in any foreign country provided the requirements, in the opinion of the board, are equivalent. Any person twenty-five years of age, of good moral character, gradu- ate of an accredited high school or an equivalent educa- tion, who has had three years' experience in the practice of public accounting in Montana, and whose qualifications are in every respect equal to those assumed or implied by the successful passing of the examination and who is per- sonally known to the board to be so qualified as a compe- tent and skilled accountant in theory and practice and who shall apply to the university for such certificate within one hundred and eighty days after the passage of the act. Nebraska. Members of the state association for public accountants are granted certificates without examination. Netc Jersey. The governor, upon written recommendation of the board may waive the examination of any person pos- sessing the general qualifications who has practiced for more than three years -before the passage of the act as public accountant in the state, and shall apply for such certificate within one year thereafter. The board may waive the examination of any person who at the time of the application resides in New Jersey, and has a valid certificate as a certified public accountant issued under anothor state which grants a similar privi- lege. New York. The regents of the university may waive the examination of any person possessing the general qualifi- cations, who shall have practiced in New York for more than one year as a public accountant on his own account 34 CERTIFIED PUBLIC ACCOUNTANTS and who shall apply for such certificate prior to Sept. 1, 1901. Ohio. Any person who applies for a certificate within six months after the organization of the board, is at that time a public accountant, has practiced the profession of public accounting; for at least three years, who files proof of such facts and proof of the special education required. Any person who is a citizen of the United States or has declared his intention of becoming such, is over twenty- one years of age, of good moral character, who has com- plied with the rules and regulations of the board and who holds a valid certificate as a certified accountant issued by any other state or foreign nation when the board is satis- fied that their requirements are substantially equivalent to those in Ohio. Pennsylvania. Any person who has been for three years before the passage of the act practicing as a public ac- countant and who shall apply for such certificate within a year thereafter. Rhode Island. Holder of certificate issued under the laws of other states which extend the same privilege. Pos- sessor of general qualifications, who has practiced in Rhode Island on his own account for more than three years preceding the passage of the act, and who applies for such certificate within six months thereafter. Utah. Any person who practiced for more thai* two years prior to the passage of the act as a public account- ant on his own account and who shall apply within one year thereafter. Virginia. Any person possessing the general qualifica- tions, who is the holder of a certified public accountant CERTIFIED PUBLIC ACCOUNTANTS 35 certificate, issued under the laws of another state which extends similar privileges to certified public accountants of Virginia, provided the requirements are, in the opinion of the board, equivalent. Any person who is the holder of a certified public accountant certificate issued under the law of a foreign country, provided the requirements are, in the opinion of the board, equivalent. Any person who has for at least one year next preceding the date of his application, been practicing in Virginia as a public ac- countant on his own account, who shall apply for such certificate within six months after the act becomes oper- .ative. Washington. Any person possessing the general qualifi- cations, who has been for moi'e than one year prior to the passage of the act a resident of the state of Washington, who shall apply in writing for such certificate within a year thereafter. Certificates Mate Issued by Duration California Colorado Connecticut Florida Georgia Illinois Board Board Governor, upon recom- mendation of board One year, may be renewed from year to year Until revoked Until revoked Until revoked Board Governor, upon recom-iUntil revoked mendation of board University Until revoked 36 CERTIFIED PUBLIC ACCOUNTANTS Certificates Continued. -r - State lKtfH('3. 2 Journal of Accountanc y. WISCONSIN LIBRARY COMMISSION COMPARATIVE LEGISLATION BULLETINS No. 1. Hallway Coemployment. No. 2. Lobbying. No. 3. Corrupt Practices at Elections: Contributions and Expenditures. (Out of print) No. 4. Exemption of Wages. No. 5. Municipal Electric Lighting. (Out of print) No. 6. Trust Company Reserves. (Out of print) No. 7. Taxation of Trust Companies. (Out of print) No. 8. Municipal Gas Lighting. (Out of print) No. 9. Boycotting. (Out of print) No. 10. Blacklisting. (Out of print) No. 11. The Initiative and Referendum: State Legislation. No. 12. The Recall. No. 13. Primary Elections. The Test of Party Affiliation. No. 14. Proportional Representation. No. 15. Juvenile Courts. No. 16. Telephones. Interchange of Service. No. 17. Mortgage Taxation. No. 18. Municipal Home Rule Charters. No. 19. Tenement House Legislation. State and Local. No. 20. Accident Insurance for Workingmen. No. 21. The Initiative and Referendum. (No. 11 Revised) No. 22. Certified Public Accountants.