The Institute of Accounts This book focuses upon the Institute of Accounts (IA), an organization to which the modern United States’ accounting profession can trace its roots. The IA was organized in the early 1880s in New York City and, as discussed in this book, attracted a diverse membership that included some of the leading accounting thinkers of the period. The Institute of Accounts describes the association’s early development, its usefulness to the needs of bookkeepers and accountants in the late nineteenth century, and its historical importance. The book begins with an introduction, which is followed by a description of the organization, its goals, its membership classifications, and its professional characteristics. The authors then discuss the problems facing bookkeepers and accountants in the late nineteenth century and the usefulness of the IA in addressing the needs of its members. This is followed by consideration of how the thinking of IA leaders about the nature of accounting knowledge for many years unified the IA’s membership by providing answers not only to questions of theory and practice, but also to how this knowledge could play a role in assisting government and business leaders more effectively to order a society experiencing substantial flux. The authors go on to analyze the factors leading to the IA’s decline after the enactment of the first CPA law. The book concludes with a consideration of the legacy of the IA. The Institute of Accounts will be essential reading for accounting historians. Stephen E. Loebis the Ernst & Young Alumni Professor of Accounting and Business Ethics at the Robert H. Smith School of Business, Univer- sity of Maryland. He was formerly co-editor of the Journal of Accounting and Public Policy and is the Historian of the Maryland Association of Certified Public Accountants, Inc. Paul J. Miranti, Jr. was formerly the Associate Dean for Faculty and Research at Rutgers Business School. He is the author of Accountancy Comes of Age: The Rise of an American Profession, 1886–1940 (1990), and co-author of A History of Corporate Finance (1997). Routledge New Works in Accounting History Series editors Richard Brief, Leonard N. Stern, School of Business, New York University, Garry Carnegie, Deaking University, Australia JohnRichard Edwards, Cardiff Business School, UK Richard Macve, London School of Economics, UK 1 The Institute of Accounts Nineteenth-century origins of accounting professionalism in the United States* Stephen E. Loeb and Paul J. Miranti, Jr. 2 Professionalism and Accounting Rules Brian P. West 3 Accounting Theory Essays by Carl Thomas Devine Edited by Harvey Hendrickson and Paul Williams 4 Mark to Market Accounting “True North” in financial reporting Walter P. Schuetze, edited by Peter W. Wolnizer *This title also features in “The Monograph Series of the Academy of Accounting Historians,” selected by The Academy of Accounting Historians. The Monograph Series of the Academy of Accounting Historians Edited by O. Finley Graves Monograph 1 A Reference Chronology of Events Significant to the Development of Accountancy in the United States C.L. Knight, G.J. Previts, and T.A. Radcliffe Monograph 2 Lest we forget ... John Raymond Wildman, 1878–1938 Gary John Previts and Richard F. Taylor Monograph 3 Eric Louis Kohler: A Collection of His Writing (1919–1975) William W. Cooper, Yuji Ijiri, and Gary John Previts, editors Monograph 4 Selected Papers from the Charles Waldo Haskins Accounting History Seminars James F. Gaertner, editor Monograph 5 The Development of the Accounting Profession in Britain to the Early Twentieth Century R.H. Parker Monograph 6 The Costing Heritage: Studies in Honor of S. Paul Garner O. Finley Graves, editor Monograph 7 Annotated Bibliography of Russian Language Publications in Accounting 1736–1917, Volumes I and II Wolodymyr Motyka Monograph 8 The History of the German Public Accounting Profession H.B. Markus Monograph 9 The Institute of Accounts: Nineteenth-Century Origins of Accounting Professionalism in the United States Stephen E. Loeb and Paul J. Miranti, Jr. The Institute of Accounts Nineteenth-century origins of accounting professionalism in the United States Stephen E. Loeb and Paul J. Miranti, Jr. First published 2004 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group This edition published in the Taylor & Francis e-Library, 2004. © 2004 Stephen E. Loeb and Paul J. Miranti, Jr. All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Loeb, Stephen E. The Institute of Accounts : nineteenth-century origins of accounting professionalism in the United States / Stephen E. Loeb and Paul J. Miranti, Jr. p. cm. 1. Institute of Accounts. 2. Accountants – United States. 3. Accountants – Professional ethics – United States. I. Miranti, Paul J. II. Title. HF5616. U5L64 2004 657' .06'073–dc21 2003013316 ISBN 0-203-64443-3 Master e-book ISBN ISBN 0-203-67536-3 (Adobe eReader Format) ISBN 0-415-28874-6(Print Edition) To Cynthia Loeb, who makes everything possible and to Adrienne Gnassi, with love Contents Foreword xi Acknowledgments xiii Section 1 Introduction 1 Section 2 Origins, goals, membership, and professional characteristics 7 Section 3 Functionality of the IA and its role in professionalization 22 Section 4 The structure of accounting knowledge and the natural order of society 28 Section 5 Decline of the IA 43 Section 6 Legacy 60 Notes 68 References 76 Index 103