Wishful Thinking? Independence Day for Accountants

Long live July 2, the day the Continental Congress in 1776 voted to declare independence from Great Britain.

You celebrate July 4 as Independence Day?

All known records report July 2 as the true Independence Day.  It’s in the notes of Congress for July 2.  It was reported on July 2 in a local newspaper, the Pennsylvania Evening Post.  And John Adams (future president of the United States) writing to wife Abigail on the night of July 2, said, “the Second of July, 1776, will be the most memorable Epocha, in the History of America. I am apt to believe it will be celebrated, by succeeding Generations, as the great anniversary Festival.”

Thomas Jefferson and the rest of the committee assigned to write a statement explaining the July 2 declaration of independence had a final draft ready by July 4, and it was passed by majority vote (9 states for, 2 against, 2 abstaining).  Timothy Matlack, assistant to the secretary of the Continental Congress, had a presentable copy ready by August, and on August 2 it was signed by many of the delegates to the Continental Congress.

Detail from: Currier and Ives. The Declaration Committee New York, 1876

For history buffs, here’s a timeline of the events surrounding the declaration of independence and its publishing, from the Library of Congress:

• June 7, 1776 - Congress, meeting in Philadelphia, receives Richard Henry Lee’s resolution urging Congress to declare independence.
• June 11, 1776 - Thomas Jefferson, John Adams, Benjamin Franklin, Roger Sherman, and Robert R. Livingston appointed to a committee to draft a declaration of independence. American army retreats to Lake Champlain from Canada.
• June 12th through the 27th, 1776 - Jefferson, at the request of the committee, drafts a declaration, of which only a fragment exists. Jefferson’s clean, or “fair” copy, the “original Rough draught,” is reviewed by the committee. Both documents are in the manuscript collections of the Library of Congress.
• June 28, 1776 - A fair copy of the committee draft of the Declaration of Independence is read in Congress.
• July 1st through 4th, 1776 - Congress debates and revises the Declaration of Independence.
• July 2, 1776 – Congress declares independence as the British fleet and army arrive at New York.
• July 4, 1776 - Congress adopts the Declaration of Independence in the morning of a bright, sunny, but cool Philadelphia day. John Dunlap prints the Declaration of Independence. These prints are now called “Dunlap Broadsides.” Twenty-four copies are known to exist, two of which are in the Library of Congress. One of these was Washington’s personal copy.
• July 5, 1776 - John Hancock, president of the Continental Congress, dispatches the first of Dunlap’s broadsides of the Declaration of Independence to the legislatures of New Jersey and Delaware.
• July 6, 1776 - Pennsylvania Evening Post of July 6 prints the first newspaper rendition of the Declaration of Independence.
• July 8, 1776 - The first public reading of the Declaration is in Philadelphia.
• July 9, 1776 - Washington orders that the Declaration of Independence be read before the American army in New York
• July 19, 1776 - Congress orders the Declaration of Independence engrossed (officially inscribed) and signed by members.
• August 2 , 1776 - Delegates begin to sign engrossed copy of the Declaration of Independence. A large British reinforcement arrives at New York after being repelled at Charleston, S.C.
• January 18, 1777 - Congress, now sitting in Baltimore, Maryland, orders that signed copies of the Declaration of Independence printed by Mary Katherine Goddard of Baltimore be sent to the states.

The Library of Congress has created a nice narrative of the process undertaken to draft the Declaration of Independence, here.

Independence is a concept that is near and dear to some of those associated with the disclosure of financial results from corporations to the investing public (thanks for the reminder, Daniel Stoica).

The U.S. Congress in 1933 designated that financial statements be reviewed by independent public accountants.  It is an ideal still cherished by many.  Independent refers to the ideal relationship between accountants and corporate management.  Accountants are to render their opinions free from corporate influence.  Public refers to those who receive the ministrations of these independent accountants.

Unfortunately, we do not have independent public accountants, neither in the United States nor any place else.  The phrase independent public accountant is grounded in as much reality as the July 4th Independence Day.  Audit firms, the modern form of the CPA, are hired by corporate management to provide a favorable audit opinion for the financial statements, and audit firms have a history of showing they are only too willing to comply.  Most of the large firms are on record as stating that they serve their paying clients (the corporation), not the public.  It is difficult to get an audit firm to admit it serves in the public interest.

On this Independence Day weekend, I will celebrate the independence of the U.S., and the freedom I experience as a result of those fateful days back in June, July and August of 1776,   Without that freedom, I could never criticize the government regulation of accounting and accounting standards, as I have been known to do.

And I will celebrate the ideal of accountant independence.  I hope to live long enough to see it.

Debit and credit – - David Albrecht