How the U.S. Accounting Profession Got Where It Is Today: Part I ---- Stephen A. Zeff

Accoimting Horizoii.s Vol. 17, No. 3 September 2003 pp. 189-205

How the U.S. Accounting Profession Got Where It Is Today: Part I

Stephen A. Zeff

Synopsis: Few would deny that the U.S. accounting profession is in a very troubied state. The aim of this two-part article is to explain how and why the profession evolved and changed during the 20th century, with particular emphasis on the last three decades. It is my hope that this article will illuminate the origins and consequences of these changes that collectively brought the profession to its current condition.

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his paper reviews, examines, and interprets the events and developments in the evolution of the U.S. accounting profession during the 20th century, so that one can judge "how we got where we are today." While other historical works study the evolution of the U.S. accounting profession,' this paper examines two issues: (1) the challenges and crises that faced the accounting profession and the big accounting firms, especially beginning in the mid-1960s, and (2) how the value shifts inside the big firms combined with changes in the earnings pressures on their corporate clients to create a climate in which serious confrontations between auditors and clients were destined to occur. From available evidence, auditors in recent years seem to be more susceptible to accommodation and compromise on questionable accounting practices, when compared with their more stolid posture on such matters in earlier years. INTRODUCTION The paucity of available evidence about actual changes occurring within the big firms, especially from the 1970s onward, poses a major difficulty in conducting this kind of research. Without statistical analysis, the court cases, regulatory investigations, and press reports of alleged audit Stephen A. Zeff is a Professor at Rice University.

The author expresses his appreciation to several accounting academies and to more than a dozen aetive and retired senior partners of major accounting...