More Than a Numbers Game: A Brief History of Accounting

By Zeff, Stephen A. | The CPA Journal, April 2007 | Go to article overview

More Than a Numbers Game: A Brief History of Accounting


Zeff, Stephen A., The CPA Journal


More Than a Numbers Game: A Brief History of Accounting By Thomas A. King Published by John Wiley & Sons, 2006; ISBN: 978-0-470-00873-7, 242 pages, $29.95.

This refreshing book is a wellresearched, well-written, and intelligent explanation of modern-day U.S. accounting and how it has evolved to its present state. Thomas A. King, the author, studied accounting at New York University and obtained an MBA from Harvard. He is a CPA and former member of Arthur Andersen's New York audit staff, and since then has been a corporate controller, investment strategist, and treasurer. In the course of his extensive research for the book, he has not only found and read the pertinent history, but he understands and explains it exceptionally well. He styles the book as "a history of ideas."

The author is at his best when telling stories, whether of the twists and turns in specific accounting standards from the 1940s to the present, of the accounting transgressions of Enron, Global Crossing, WorldCom, and HealthSouth, or of the factors leading to the demise of Arthur Andersen. The 15 chapters make for easy reading. King is a concise writer, yet he never sacrifices accuracy or completeness. He effectively uses numerous tables and diagrams to illustrate his points. Throughout, he places accounting developments against the backdrop of economics, finance, law, and actual business decisions. If ever a book on accounting could be described as lively and entertaining, this one comes close. It should prove edifying not only to financial analysts, financial executives, and regulators, but also to accounting practitioners, academics, and students. King's gift for rendering complex ideas into easily understandable explanations, all in a conversational style, makes this book accessible to the general investing public as well.

King begins by examining the 19th-century development of corporate financial reporting, including the impact of the growth of the railroads, followed by a chapter on the impact of the income tax on financial reporting. He discusses deferred tax accounting and provides a full and insightful treatment of the emergence of LIFO. He then devotes a chapter to tracing the evolution of management accounting.

King then discusses the formative years of modern accounting and auditing, chiefly in the 1930s, including a brief treatment of auditors' liability. Oddly, he says nothing of the inadequate financial disclosure requirements of the state corporation laws, which made national securities legislation all the more imperative to promote the disclosure of financial information to both shareholders and the securities market. He then reviews, with his usual flair for divining historical antecedents, the evolution of the U.S. standards-setting process from the 1930s to the 1970s. Among the controversies he covers are the uniformity- versus-flexibility debate in the 1950s, accounting for the investment tax credit in the 1960s, and accounting for troubleddebt restructuring and oil and gas exploration in the 1970s. …

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