October 2001

Four Society Members Who Made a Difference

By Robert H. Colson

Since the founding of the New York State Society of Certified Public Accountants in 1897, many of its members have provided public leadership in the world of accounting and finance. Four members whose actions have led the way for others to follow are Charles Waldo Haskins, Arthur H. Carter, Philip L. Defliese and Marilyn A. Pendergast. Their careers span from the dawn of the CPA profession in this country, through the grant of the Securities and Exchange Commission franchise and development of generally accepted accounting standards, to the globalization of the accounting profession.

Charles Waldo Haskins was the first president of the NYSSCPA, serving from 1897 until his death in 1903. The Society’s members re-elected him several of those years by acclaim, although he was not officially on the ballot. After study in the U.S. and Europe, Haskins became the accountant for a construction company and a railroad company before opening his own public accounting practice in 1886. His collaboration with Elijah Watt Sells led to the creation of the firm of Haskins and Sells.

Haskins was a huge influence in the effort to convince the New York State Legislature to recognize public accounting as a licensed profession. He was also a prolific writer on accounting and professional responsibilities.

In 1901, Haskins joined a group of far-sighted individuals in organizing the business school at New York University. He served as its first dean and set the twentieth-century standard for the education, experience and conduct for future generations of CPAs.

Arthur H. Carter was managing partner of Deloitte, Plender, Haskins & Sells and was NYSSCPA president at a critical juncture in the development of the CPA profession—the formation of the SEC. In 1933, he was invited by the Senate Committee on Banking and Currency to testify concerning the pending legislation on securities regulation. They chose him because he was president of the largest association of CPAs.

The senators wanted to talk with him about nationalizing a corps of auditors to audit the financial statements of SEC registrants. They pressed Carter about a statutory bookkeeping system for all registrants, but Carter convinced them that it would be better for independent CPAs in the private sector to audit the financial statements of registrants according to general accounting principles. Carter assured the senators that for years CPAs in the private sector had provided audits of many public companies.

When pressed about who would audit the auditors, Carter replied that the integrity of CPAs, whose professional status and livelihood depend on their independent perspective, is the best way to protect the public. CPAs remain the only professionals who enjoy by virtue of their license a special franchise in the securities statutes of the U.S.

Philip L. Defliese was managing partner of Coopers & Lybrand (now known as PricewaterhouseCoopers) during a time of great growth in the accounting profession. He also served as chairman of the Accounting Principles Board (APB) for most of its existence. Before 1959, the Committee on Accounting Procedure, an ad hoc group that met when needed, made accounting principles by consensus. The APB, which Defliese led in the 1960s until it was replaced by the Financial Accounting Standards Board (FASB), was a designated group of volunteers from the American Institute of CPAs (AICPA) who became responsible for promulgating generally accepted accounting principles (GAAP). The APB initiated a research-based approach to setting principles that has continued at the FASB. Many of the opinions of the APB remain in effect as current GAAP.

In addition to his leadership at Coopers & Lybrand and of the accounting profession, Defliese held all the requirements for a Ph.D. in education except a dissertation. He left his first accounting job to teach in the New York City school system because the compensation was significantly better. He later returned to the accounting profession and rapidly worked his way up through the ranks to its leadership. His influence on the role of the APB set the stage for the FASB, which is independent of the accounting profession and populated by a small number of full-time, compensated standards setters. Defliese remains the role model for leadership on accounting standards.

Marilyn A. Pendergast, a partner in Urbach Kahn & Werlin since 1974, has worked with clients from a variety of industries during her 35 years in public accounting. She is currently a member of the managing committee of UKW, LLP, as well as Urbach Kahn & Werlin Advisors, Inc., a Centerprise Company.

Her firm’s establishment of an international partnership, Urbach Hacker Young, Intl., in the 1980s was the genesis of her belief that international business is not limited to the Big Five but has tremendous potential for all accountants. She is a firm believer that “good ethics are good business” and that a strongly enforced code of conduct for accountants is essential for public protection.

Pendergast, who served as NYSSCPA president in 1994-1995, has contributed substantially to the globalization of accountants’ standards of professional conduct. Her experience with professional conduct standards began as a member of the NYSSCPA’s Professional Ethics Committee, the senior committee that creates, monitors and enforces the code of professional conduct of the Society.

In addition, Pendergast served for eight years on the AICPA’s Professional Ethics Executive Committee, three of them as its chair. In 1992, she was appointed to the International Federation of Accountants’ (IFAC) ethics committee and has been its chair for two terms, during which time the committee has addressed many professional conduct issues. The committee members’ efforts during the past three years have focused on standards for independence that would serve the accounting profession worldwide, which Pendergast expects to be approved by the IFAC Board of Directors before the end of 2001.

Four NYSSCPA members from different eras represent the history and development of the accounting profession—from its beginnings with Haskins; to the award of its special audit franchise during Carter’s time; to the development of a body of authoritative accounting principles under Defliese’s leadership, and onward to the worldwide adoption of the independence standards of CPAs under the direction of Pendergast. Three of those members served as presidents of the NYSSPCA, all four drew inspiration from their Society membership, and each led the accounting profession into a new age.

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