Carousel of progress

The accounting profession and the world in general have undergone extraordinary changes since the American Association of Public Accountants was founded in 1887. Each of the following sections focuses on a single year. The text describes what life and work were like for accountants at that time. On this four-stop journey, you will see the transformation of a profession and a planet. Enjoy the ride.

• What the AICPA was called: American Association of Public Accountants.
• Number of members: 22.
• Accounting salary information: No salary data were found for 1887, but an engagement letter from Haskins & Sells shows that the accounting firm in 1902 charged a daily rate of $15 for accountants and $50 for senior accountants, plus travel costs.
• Largest accounting firms: There were no large U.S. firms in 1887.

ACCOUNTANTS IN 1887

• Job duties: Bookkeeping, financial statement preparation and attestation, cost accounting, fraud investigations; establishment of accounting systems and controls.
• Tools/Technologies used: No equipment other than a slide rule for percentages. Reports were handwritten on accounting ruled paper.
• Typical workweek: Six days.
• Typical clients: Railroads, oil refiners, steel mills, utilities, insurance, banking, financial, and brokerages.

THE GENERAL LEDGER

• Population—World, U.S.: 1.6 billion (1900 estimate); 62.62 million (1890).
• U.S. GDP: Estimated $13.15 billion.
• U.S. median household income: Data not available.
• Federal spending: About $310 million.
• Unemployment: 4% in 1890 (estimate by economist Stanley Lebergott).
• Time to cross Atlantic: Six to eight days via ship.
• Major forms of communication: Telegraph, mail.
• Baseball champion: Detroit Wolverines.

• What the AICPA was called: American Institute of Accountants.
• Number of members: 4,764 as of 1937, though the JofA had more than 10,000 subscribers.
• Accounting salary information: No figures were found for 1938, but a 1929 payroll register of CPA firm Haskins & Sells shows the firm paid staff accountants about $120 a month and senior accountants $225 a month. Partners withdrew $1,250 a month, or $15,000 a year—equal to about $191,000 in 2012.
• Largest accounting firms: Haskins & Sells; Price Waterhouse; Touche, Niven & Co.; Ernst & Ernst; Arthur Andersen; Peat, Marwick, Mitchell & Co.; Lybrand, Ross Bros. & Montgomery; Arthur Young & Co.

CPAs IN 1938

• Job duties: Tax return preparation; financial statement auditing and preparation; business management consulting; cost accounting; establishment and evaluation of accounting systems and controls.
• Tools/Technologies used: Large mechanical adding machines, comptometers, and typewriters.
• Typical workweek: Five full days, half day on Saturdays.
• Typical clients: Public companies, banks, utilities, brokerages, small businesses, and insurers.

THE GENERAL LEDGER

• Population (1940)—World, U.S.: 2.5 billion, 129.8 million.
• U.S. GDP: $86.1 billion.
• U.S. median household income: $1,900/$28,065 (2010 dollars).
• Federal spending: $6.8 billion.
• Unemployment: 19% (estimate by Lebergott).
• Time to cross Atlantic: Three to four days via ship.
• Major forms of communication: Telephone, mail.
• Baseball champion: New York Yankees.

• What the AICPA was called: American Institute of Certified Public Accountants.
• Number of members: 201,764.
• Accounting salary information: CFO: $38,000–$158,000; public accounting, entry-level to manager: $14,000–$55,000.
• Largest accounting firms: Arthur Andersen; Arthur Young & Co.; Coopers & Lybrand; Ernst & Whinney; Deloitte Haskins & Sells; Peat Marwick Mitchell; Price Waterhouse; Touche Ross.

CPAs IN 1983

• Job duties: Tax return preparation; financial statement auditing and preparation; business management consulting; cost accounting; establishment and evaluation of accounting systems and controls.
• Tools/Technologies used: Spreadsheet programs VisiCalc and Lotus 1-2-3; electronic calculators; copiers; printers; and word processing software.
• Typical workweek: For public accountants, five eight-hour days with added time during tax season.
• Typical clients: Business of all types, not-for-profit organizations, government agencies.

THE GENERAL LEDGER

• Population—World, U.S.: 4.45 billion (1980), 233.8 million.
• U.S. GDP: $3.53 trillion.
• U.S. median household income: $20,885/$43,453 (2010 dollars).
• Federal spending: $808 billion.
• Unemployment: 9.6%.
• Time to cross Atlantic: 3.5 hours (on Concorde from New York to Paris).
• Major forms of communication: Telephone, mail.
• Baseball champion: Baltimore Orioles.

• Number of AICPA members: Nearly 380,000.
• Accounting salary information: CFO: $96,750–$411,000; public accounting, entry-level to senior manager: $42,500–$175,000.
• Largest accounting firms: PwC, Deloitte, Ernst & Young, KPMG.

CPAs IN 2012

• Job duties: Everything in 1983 plus outsourced CFO services; performance measurement attestation; business valuation; forensic accounting and fraud investigations; corporate governance and systems auditing; and business consulting.
• Tools/Technologies used: Desktop and laptop computers, tablets, and smartphones; cloud computing; Excel, Word, PowerPoint, QuickBooks; videoconferencing and virtual meetings.
• Typical workweek: In public accounting, same as 1983, but flexible schedules are more common.
• Typical clients: Same as 1983 plus employee benefit plans, health insurance benefits companies, and individual clients for personal financial planning.

THE GENERAL LEDGER

• Population—World, U.S.: 7 billion, 313.3 million.
• U.S. GDP: $15.09 trillion in 2011.
• U.S. median household income: $49,445 (2010).
• Federal spending: $3.8 trillion (est.).
• Unemployment: 8.2% (March 2012).
• Time to cross Atlantic: Eight hours for New York-Paris flight.
• Major forms of communication: Email, instant messaging, texting, social media.
• Baseball champion: St. Louis Cardinals (2011).

ABOUT CAROUSEL OF PROGRESS

The years 1887 and 2012 were chosen because they represent the beginnings and present of the AICPA. 1938 was selected because it reflects the impacts of major events such as the advent of the income tax in 1913, the Securities Act of 1933, and the Securities Exchange Act of 1934. 1983 shows what the early PC age was like for accountants.

Note: JofA Senior Editor Sabine Vollmer and Gary Previts, CPA, Ph.D., chairman of the accountancy department at Case Western Reserve University, contributed to this feature. Special thanks to Dale Flesher, CPA, Ph.D., associate dean of the University of Mississippi’s Patterson School of Accountancy, for his research and feedback on this project.

Sources: American Institute of Accountants Yearbooks; Baseball-reference.com; gjenvick.com; MeasuringWorth.com; Robert Half 2012 Salary Guide Accounting & Finance; Robert Half Prevailing Financial and Data Processing Starting Salaries 1984; National Bureau of Economic Research; National Library of the Accounting Profession, Patterson School of Accountancy, University of Mississippi; Pearson Education, operating as Infoplease; Population Reference Bureau; U.S. Bureau of Economic Analysis; U.S. Bureau of Labor Statistics; U.S. Census Bureau; WhiteHouse.gov.

Books and articles: Julia Grant, editor, The New York State Society of Certified Public Accountants: Foundation for a Profession; Richard Brown, editor, A History of Accounting and Accountants; Gary John Previts and Barbara Dubis Merino, A History of Accountancy in the United States: The Cultural Significance of Accounting; Gary John Previts and Barbara Dubis Merino, A History of Accounting in America: An Historical Interpretation of the Cultural Significance of Accounting; William D. Hall, Accounting and Auditing: Thoughts on Forty Years in Practice and Education; S.V.P. Cornwell, Curtis Jenkins Cornwell & Co., A Study in Professional Origins, 1816–1966; S.S. Packard and H.B. Bryant, The New Bryant and Stratton Common School Book-Keeping; Joseph H. Palmer, Elements of Book-Keeping; Earl A. Saliers, Accountants’ Handbook; William T. Sunley and William J. Carter, Corporation Accounting, Revised Edition; Thomas J. Burns and Edward N. Coffman, The Accounting Hall of Fame: Profiles of Fifty Members; “JofA Revisited: Social Origins of Modern Accountancy,” JofA, Oct. 1983, pages 100–108, reprinted from JofA, Oct. 1933 issue; JofA, May 1987, Centennial Issue, various articles.

Edward Mendlowitz (emendlowitz@withum.com) is a partner with WithumSmith+Brown in New Brunswick, N.J. Jeff Drew is a JofA senior editor. To comment on this article or to suggest an idea for another article, contact Drew at jdrew@aicpa.org or 919-402-4056.

Illustrations by Martin O’Neill/Three in a Box