The Forgotten Accounting Association: The Institute of Accounts

Article excerpt

Abstract: This paper focuses on the origin and operation of the Institute of Accountants and Bookkeepers established in New York City in 1882, one of the earliest recorded efforts to establish the accounting profession in the United States. This organization is often overlooked or confused with the American Institute of Accountants (the predecessor of the AICPA), so that little has been written about it. Periodicals published during the late 19th and early 20th centuries were used to reconstruct the history and contribution of this Institute. Its contributions were many, including forming and influencing the passage of the first CPA law, developing tests of fitness for membership 14 years before the first CPA exam, and setting standards for professionalism in the U.S. In addition, the Institute developed a foundation for treating accounting as a science which helped elevate the status of bookkeeping and public accounting during the late 19th century.

On July 28, 1882, a certificate of incorporation was filed for the Institute of Accountants and Bookkeepers of the City of New York (IABCNY), though the name was officially changed in 1886 to the Institute of Accounts (IA). This organization of bookkeepers, accountants, and businessmen should not be confused with the American Institute of Accountants (AIA).1 Aside from the contribution of its members to the formulation and passage of the New York Accountants' Law of 1896, very little has been published on the history of the Institute.2 In most histories of accounting, only a paragraph or two are devoted to this organization, even though the Institute was very active in New York City during the infancy of modern accounting. The IABCNY should not be viewed simply as an association of bookkeepers and businessmen. While those historians who have known its history have given it proper respect [Wilkinson, 1903, 1928], others, perhaps threatened by the Institute's contribution to the passage of the New York Accountants' Law of 1896, have been less generous.3

One reason that so little has been written about the IA is the absence of extant records, except for what was published in the journals and newspapers of the time. Webster [1954] could not find the minutes or any other records of the IA. Its last two members, upon joining the AIA, had not preserved any records. Even though many IA members subsequently joined the New York State Society of CPAs (NYSSCPA), no IA records are to be found in its archives as well.

The goal of this paper is to reconstruct the history and contribution of the IA, to establish its proper place in the history of U.S. accountancy by reference to materials printed in early accounting and business periodicals published in the late l9th and early 20th century.4 A chronology of the IA is presented in Appendix A. The remainder of this paper traces aspects of the IA's history - its origin; its establishment of the first examination in the accounting profession in the U.S.; its role as a forum for the science of accounts; its meetings and membership structure; its assistance in passing the New York CPA Accountants' Law of 1896; and, finally, its demise and a summary of its lasting contributions.

Professional accounting societies emerged in Scotland in the 1850s and 1860s. The Institute of Chartered Accountants in England and Wales, when incorporated by a royal charter in 1880, had as its goal to help in "the elevation of the profession of public accountants as a whole, and the promotion of their efficiency and usefulness, by compelling the observance of strict rules of conduct as a condition of membership, and by setting up a high standard of professional and general education and knowledge" [Haskins, 1901, p. 5]. Young men were apprenticed to the profession for five years, during which time they had to pass three examinations before becoming chartered. The examinations tested knowledge of Latin and the classics, decimals and fractions, double-entry bookkeeping, partnerships, company, chancery, bankruptcy, trustee and other types of accounts, and business law. …