Academic journal article The Accounting Historians Journal

Accounting Innovation: Municipal Corporations 1835-1935

Academic journal article The Accounting Historians Journal

Accounting Innovation: Municipal Corporations 1835-1935

Article excerpt

Hugh M. Coombs and John Richard Edwards, Accounting Innovation: Municipal Corporations 1835-1935 (New York: Garland Publishing, Inc., 1996, 224 pp., $57).

Reviewed by Jean E. Harris Penn State University at Harrisburg

What is the relative importance of regulation and of market forces as means of explaining changes in the accountability of municipal corporations? In addressing this question, Coombs and Edwards postulate a gradualist theory of change. They argue that changes in accountability tend to results from apparently unrelated events which on examination are part of a metamorphosis rather than from a single causal factor.

Consistent with a gradualist theory, Coombs and Edwards design a study of accounting change in municipal corporations which is broad in scope and thorough in detail. This study is recorded in Accounting Innovation: Municipal Corporations 1835-1935. It is motivated by the objective of understanding present practices as part of an evolution of developments. The scope of the study extends across five municipal corporations in the United Kingdom over a period of one hundred years. The municipal corporation in the United Kingdom is somewhat similar to the incorporated municipality in the United States. During the focal time period, it was distinguished by the growth of large public sector enterprises or trading services.

With a meticulous approach to detail, Coombs and Edwards retrieve and review archival data to trace developments in form and content of financial reports as well as developments in auditing requirements. Changes in practices are integrated into a background of competing and complimentary influences in a multifarious environment. Social context is viewed as a dominant variable which contributes to accounting change within municipal corporations and limited companies and to accounting differences between municipal corporations and limited companies.

Coombs and Edwards organize their study around eight topics each of which is addressed in a separate chapter. After discussing the design of the study in an introductory chapter, the next two chapters review the structure of local authorities and of regulatory frameworks. The study then moves to an examination of accounting practices: record keeping, framework of accounts and capital accounting. With this background, power struggles over the performance of audits are explored, and basic audit issues are described. Coombs and Edwards then extend their analysis of accounting change within municipal corporations to support an analysis of comparison of developments in municipal corporations and with development in private companies. The model of change which emanates from the study is summarized in concluding comments.

Ultimately, Coombs and Edwards abandon regulation and market forces as significant influences on accounting change in municipal corporations. Regulation cannot account for changes in municipal reporting practices because changes in regulation over the 100 year focal period were inconsequential. Market forces cannot account for changes in municipal reporting practices because there is no evidence of external demand for information and no evidence of the use of reports by external parties. …

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