Public Company Accounting Oversight Board chairman James Doty recently delivered an illuminating history of the accounting profession in New York during a speech.
The speech, during an auditing conference hosted by the New York State Society of CPAs’ Foundation for Accounting Education last Thursday, traced the history of accounting in the Big Apple going back to 1651 when a bookkeeper, Johannes Dyckman, was appointed by the Dutch West India Company. However, Dyckman’s tenure on the job did not continue for very long.
“After a year, in 1652, the directors fired Dyckman and hired another man, reportedly because the directors felt they were ‘not properly informed of prizes captured, shops sold, et cetera.’ The history of the economic development of New York is intertwined with the development of ideas, measures and policies to avoid recurrence of just such a problem,” he said.
Doty has also been proposing the mandatory rotation of auditing firms lately. He went on to describe the passage of New York’s first CPA law in April 1896 and the establishment two years later of the American Association of Public Accountants, which promptly secured the arrest of an Englishman who was supposedly practicing without the proper qualifications.
Other states soon followed New York with their own CPA laws. The CPA profession found its skills in heavy demand during the Great Depression, when Congress passed the Securities Exchange Act of 1934 in response to the stock market crash of 1929. The law established the SEC and required public companies to file annual financial statements with the opinion of a CPA attesting to their accuracy.
Doty sees the need for further evolution in the accounting profession, especially as the economy struggles to recover from the financial crisis of 2008. “The public outcry we hear when a reporting failure becomes apparent reminds us that the expectation gap is as wide as ever,” he said. “No one should be surprised that the accounting profession finds itself again, today, at a point where its role is under examination. It is my hope that, as auditors, you will look back on this time as the moment when you turned to seize the future. With a century of experience responding to the public interest, the New York State Society will be an important voice.”