Clarke, Frank L.

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The Accounting Historians NotebookVolume 34Number 1 April 2011 Article 52011Sydney School of Accounting: 50th anniversaryFrank L. ClarkeFollow this and additional works at: https://egrove.olemiss.edu/aah_notebookPart of the Accounting Commons, and the Taxation CommonsThis Article is brought to you for free and open access by the Archival Digital Accounting Collection at eGrove. It has been accepted for inclusion inThe Accounting Historians Notebook by an authorized editor of eGrove. For more information, please contact memanuel@olemiss.edu.Recommended CitationClarke, Frank L. (2011) "Sydney School of Accounting: 50th anniversary," The Accounting Historians Notebook: Vol. 34 : No. 1 , Article5.Available at: https://egrove.olemiss.edu/aah_notebook/vol34/iss1/512                                                                                 The Accounting Historians Notebook, April 2011 Sydney School of Accounting: 50th Anniversary Frank Clarke, Graeme Dean and Murray Wells*  The ‘Sydney School of Accounting’ is the enduring lega-cy arising from the tenure of Ray Chambers in the Department (now the Discipline) of Accounting in the University of Sydney. Ray-mond John Chambers (1917–99) was born and educated in New-castle, New South Wales, before being awarded a scholarship to study economics at the University of Sydney, from which he gradu-ated in 1939. He was the first full-time lecturer in accounting at the university (in the Department of Economics), becoming senior lec-turer in charge of accounting in 1953, at a time when evening classes were the norm. In 1960 he was appointed to the university's Foundation Chair of Accounting in the newly created Department of Accounting, a position he occu-pied until his retirement in 1983. The appointment presaged the rise of accounting there to a standing equal to that of the traditional aca-demic disciplines. Consistent with Cardinal John Henry Newman’s dictum that the function of a uni-versity is to expose ‘false doc-trines and profess the truth’, he set about establishing a cadre of scholars wedded to the discipline of accounting and dedicated to the pursuit of evidenced-based re-search. Of that cadre which hus-banded the Sydney School, eight-een eventually became professors of accounting in Australia, the United States and the United Kingdom.   Chambers’ intellectual school was forged during a dy-namic period described by Cham-bers and Dean (1986, ‘General Preface’) as ‘one of substantial business growth, of conglomera-tion on a large scale by mergers and takeovers, of intense multina-tional corporate development, of increasing use of modes of organi-zation and methods of financing that were novel at the beginning of the interval … The accountan-cy profession grew in scale and changed in style under the influ-ence of such things as these.’1 By the 1970s the department had (Continued on page 13) * Frank Clarke is Emeritus Professor, University of Newcastle and  Honorary Professor, University of Sydney; Grae-me Dean is Professor of Accounting, University of Sydney; Murray Wells is Emeritus Professor, University of Syd-ney 1 R Chambers and G. Dean (eds) , Chambers on Accounting, Vol. I: Ac-counting, Management and Finance, Garland, 1986.  1Clarke: Sydney School of Accounting: 50th anniversaryPublished by eGrove, 2011The Accounting Historians Notebook, April 2011                                                                                  13 out was a focus on the history and development of ideas, their muta-tion and, often, their misuse.  In that environment the contagion of Chambers’ enthusiasm, his exam-ple and pursuit of academic excel-lence and breadth of scholarship nurtured the Sydney School, to rival the other main schools of accounting — at the London School of Economics and the Uni-versity of Chicago.2 The former was known for reconciling con-cepts of accounting and economic income, specifically advocating deprival value — a variant of re-placement cost accounting; the latter for its advocacy of ‘market’ solutions rather than government intervention.  Uppermost in Chambers’ explorations was a search for a definitive function of accounting. He adopted a ‘balance sheet’ viewpoint in the calculation of income, but with the recognition of the need to articulate defini-tions of asset, liability, revenue and expense, distributions and contributions. In this regard he anticipated what is now widely (Continued on page 14) grown from a small group of few-er than half a dozen full-time aca-demics to a faculty consisting of fifteen accountants and ten law-yers.  The emergence of the Syd-ney School was propitious. The 1960s and 1970s was the golden age of accounting theorists world-wide — Ray Chambers, Bob Ster-ling, Ricco Mattessich, Maurice Moonitz, Yuji Ijiri, George Stau-bus, David Solomons, Will Bax-ter, Basil Yamey and others.  Ac-counting was being accepted as a scientific discipline — scholars, not just technicians dominated discussion. The interface between accounting theorists and counter-parts in the management sciences (such as operations research) in-volved liaisons by the likes of William Cooper, Abraham Charnes, Ernest Weinwurm with their management science and ac-counting contemporaries. Ac-counting scholars were directed to unraveling the fundamental prin-ciples (postulates) of the disci-pline, discarding the trendy meta-phoric bases of accounting prac-tices — stewardship and conserv-atism.  The focus then switched to the function of accounting, deci-sion usefulness, financial attrib-utes and the measurement of them.  In such an age of discovery for accounting, foremost through-(Continued from page 12) 2 While other institutions including UCLA, UC at Berkeley, Stanford, the University of Michigan and  Ann Ar-bor had many leading accounting aca-demics such as  Moonitz and Paton, they were not known for any unifying school of thought.  2The Accounting Historians Notebook, Vol. 34 [2011], No. 1, Art. 5https://egrove.olemiss.edu/aah_notebook/vol34/iss1/514                                                                                 The Accounting Historians Notebook, April 2011 known as the ‘conceptual frame-work’ of accounting, grounded in the business environment within which accounting provides a ser-vice function.  Members of the Sydney School followed Chambers in pur-suing the exposure of false doc-trines, fastidiously scrutinizing conventional practice and school-ing students to prosecute reform so that accounting might provide serviceable financial information to the public at large, in an orderly commercial environment. The school sought to enhance ac-counting’s recognition as an equal amongst the accepted university disciplines. To that end other vi-sions were also pursued — partic-ularly Chambers’ desire for, and pursuit of, general public aware-ness that there could be a better corporate reporting system — a system based not on custom and dogma, but one that was scientifi-cally based. This entailed the need for greater recourse to research, to theoretical explorations, to the history of its underpinning ideas, and to empirical findings and the testing of reform proposals.   Several characteristics dif-ferentiated Sydney from other ac-counting schools in Australia and elsewhere, and continue to do so. Of particular note is its consistent missionary-like zeal to reform (Continued from page 13) conventional accounting by elimi-nating observed deficiencies in accounting practice.3  That zeal led to students within the School being introduced to methods of systematic enquiry; rote learning of accepted practices and doc-trines was replaced by inculcating scientific methods, the principles of measurement, the use and abuse of language as a means of communication and the gathering of evidence to underpin reasoned thinking. Proposals for reform re-sulted — many relating to the law of company accounts, predicated on auditing and accounting being integrally connected.   As an example, and as most subtitles of the following books imply, the serviceability of the current accounting for corpo-rate groups is contestable — from Chambers’ Accounting in Disar-ray: Reform of the Law of Corpo-rate Accounts (1973, 1980) and Walker’s Consolidated State-ments: A History and Analysis (1978) to, more recently, Clarke, Dean and Oliver’s Corporate Col-lapse: Accounting, Regulatory and Ethical Failure (1997, 2003), and Clarke and Dean’s Indecent Disclosure: Gilding the Corporate Lily (2007). These books have a (Continued on page 15) 3 See Chambers, ‘Observation as a Method of Inquiry’, Abacus, December 1973.  3Clarke: Sydney School of Accounting: 50th anniversaryPublished by eGrove, 2011The Accounting Historians Notebook, April 2011                                                                                  15 respective current selling prices. Transactions are accounted for in a manner consistent with tradi-tional double entry processes and the matching principle is used sys-tematically. Income for a period under CoCoA has three compo-nents: first, net revenues — all receipts less all payments made in the course of business; second, a price variation adjustment — the net amount of all changes in the cash equivalents of physical as-sets; and third, the capital mainte-nance adjustment — the scale ad-justment necessary to restate net wealth at the period's commence-ment in terms of the general pur-chasing power of the currency at the end of the period.4  This pre-scription has enabled those fol-lowing Chambers to examine rig-orously, through higher degrees and subsequent publications, other issues in accounting, particularly — accounting education (Birkett), allocation of overheads and the use of transfer prices (Wells), eth-ics and governance (Perera), the principles of auditing (Wolnizer), creative accounting and company failures (Clarke and Dean), crea-tive accounting generally and public sector accounting more (Continued on page 16) common theme, proposing a fully worked, alternative method for group accounting and reporting.   Having settled on a func-tion of accounting in Accounting, Evaluation and Economic Behav-ior (1966, p. 4), ‘to provide de-tailed and aggregate financial in-formation as a guide to future ac-tion in markets’, Chambers identi-fied the need for accounting to satisfy a ‘decision usefulness’ cri-terion.  This was developed into the logically rigorous system which has become widely known as ‘CoCoA’ (Continuously Con-temporary Accounting). It con-flicted with the current conven-tions, yet was consistent with a large body of economics literature on money, prices, price levels and price structures, the tenets of measurement theory and the com-mon sense rules of financial cal-culation. It requires that a busi-ness’s wealth be measured by the unencumbered current general purchasing power it commands; income is the increase in the enti-ty’s net wealth; and loss, the de-crease. Net wealth is the aggre-gate of the face values of its cash and other liquid assets plus the cash equivalent of its physical as-sets, less the contractual amount of its liabilities. The cash equiva-lent of separable physical assets is taken to be best indicated by their (Continued from page 14) 4 In The Sydney School of Accounting (2010) we recount additional differen-tiating characteristics — especially in Chapter 2.  4The Accounting Historians Notebook, Vol. 34 [2011], No. 1, Art. 5https://egrove.olemiss.edu/aah_notebook/vol34/iss1/516                                                                                 The Accounting Historians Notebook, April 2011 specifically (Walker), philosophy and critical accounting (Gaffikin), statistical inference (Johnstone), sociology of the accounting pro-fession (Poullaos), international accounting (Gray) and interna-tional accounting standards setting (Rahman and Islam).   Central to the Chambers’ legacy, and a continuing feature of the Sydney School, has been the journal Abacus, one of the leading international journals in accounting.  Launched by Cham-bers in 1965 after a difficult birth, the journal was edited continuous-ly by Sydney School members for nearly 45 years —  Chambers (1965–74), Wells (1975–94), Dean (1995–2009; and assistant editor from 1987–95), with Brooker and Clarke  associate edi-tors (1967–68 and 1983–86, re-spectively). Abacus was originally published by Sydney University Press, but in a show of support from practitioners and alumni, it has been ‘owned’ by the Account-ing Foundation within the Univer-sity of Sydney since 1988.  That kind of support is a further differentiating feature of the Sydney School. There has been an enduring engagement with the accounting profession for over fifty years. The 1950s saw the seed sown for a closer rela-tionship with practice, in the form (Continued from page 15) of a proposed Town and Gown Society — the Pacioli Society.  It endures as the only accounting town and gown society in Austral-ia. Chambers and his intellectual school forged further connections through their involvement in con-ferences sponsored by bodies in-cluding the University Extension Board, the Public Accountants Registration Board and the Aus-tralian Institute of Management; through company-sponsored sem-inars run by leading companies; as well as lectures by Chambers and his colleagues to business organi-zations like Rotary and Probus. That ongoing relationship is evi-denced by Sydney School mem-bers serving in senior roles in pro-fessional and academic bodies. Examples include: Chambers — president of the (then) Australian Society of Accountants (now, CPA Australia); Wells served on National Council and as President of the N.S.W. Division of the So-ciety;  Dean, Gaffikin, Wells and Wolnizer — chaired the National Education and Membership Com-mittee; Chambers and Craswell — presidents of the Association of University Teachers of Account-ing (now the Accounting and Fi-nance Association of Australia and New Zealand); Wells and Gray — presidents of the Interna-tional Association for Accounting (Continued on page 17) 5Clarke: Sydney School of Accounting: 50th anniversaryPublished by eGrove, 2011The Accounting Historians Notebook, April 2011                                                                                  17 ing between the University and the Institute, and perhaps the time is not far distant when the aca-demic training for our profession will become a wholly a University function’. Tangible evidence of this relationship was provided by Wells’ Chair being named the Ar-thur Young Professor of Account-ing in 1985.  The achievements of the Sydney School were celebrated on 11 November 2010 at a formal dinner in the University of Syd-ney’s Great Hall as part of the Discipline’s golden jubilee. A monograph providing some anec-dotes and notes of interest about the first four decades of the De-partment of Accounting was launched — The Sydney School of Accounting: The Chambers Years.6 Most importantly, the din-ner was an opportunity for those present to celebrate and honour the distinguished achievements, professional leadership and contri-butions of many Sydney account-ing alumni.  Concluding proceedings at the dinner, the Dean of the Facul-ty of Economics and Business, Professor Peter Wolnizer (a Syd-ney School member himself) ob-served, ‘On this Golden Jubilee of (Continued on page 18) Education and Research; Cham-bers and Wells — International Distinguished Visiting Lecturers of the American Accounting As-sociation; Chambers, Dean and Clarke (twice) were Visiting Er-skine Fellows at  the University of Canterbury (New Zealand) and, following Chambers’ example, Sydney School members have published widely, with Chambers, Clarke, Dean, Gray, Walker and Wells  ranking strongly in Heck’s (2009)5 list of top accounting aca-demic publishers over the fifty years 1959–2008. Further, like Chambers before them, Walker, Dean and Clarke continue to ad-dress contemporary accounting matters in the business media.  In the late 1960s and throughout the 1970s leading practitioners provided strong sup-port for Chambers’ moves to de-velop a strong town-and-gown relationship.  Consider the follow-ing extract from a letter dated  29 September 1958, from the presi-dent  of the  Institute of Chartered Accountants, R.A. Irish, who opined presciently to Chambers: ‘As you know, there are many in our profession who are pleased to see a closer relationship develop-(Continued from page 16) 5 J. Heck, Most Prolific Authors in the Accounting Literature Over the Past Half-Century: 1959–2008, Working Paper, 2009.  6 To see photos from the event go to: http://ws.econ.usyd.edu.au/accounting/photo_gallery/.   6The Accounting Historians Notebook, Vol. 34 [2011], No. 1, Art. 5https://egrove.olemiss.edu/aah_notebook/vol34/iss1/518                                                                                 The Accounting Historians Notebook, April 2011 Accounting scholarship at the University of Sydney we are cele-brating an Australian success sto-ry. From modest beginnings fifty years ago, the Department of Ac-counting at Sydney became recog-nized and respected international-ly as the Sydney School of Ac-counting.’  Bibliography Chambers, R. J. 1966. Account-ing, Evaluation and Economic Behavior (NJ: Prentice Hall). Chambers, R.J. 1973. ‘Observation as a Method of Inquiry’, Abacus, Vol 9, No. 2, December, pp. 156-75. Chambers, R. J. 1980. Accounting in Disarray: Reform of the Law of Corporate Accounts; first published in 1973 as Se-curities and Obscurities: Re-form of the Law of Company Accounts. Chambers, R.J.  and G.W.  Dean. 1986.  Vol. I: Chambers on (Continued from page 17) Accounting – Accounting, Management and Finance (New York: Garland Publish-ing, Inc.). Clarke, F.L. and G.W. Dean. 2007. Indecent Disclosure: Gilding the Corporate Lily (Melbourne and Oxford: CUP).  Clarke, F.L., Dean, G.W., and K. G. Oliver. 2003. Corporate Collapse: Accounting, Regula-tory and Ethical Failure (Melbourne and Oxford: CUP); first published as Cor-porate Collapse: Regulatory, Accounting and Ethical Fail-ure (Melbourne and Oxford: CUP). Clarke, F.L., Dean, G.W., and M.C. Wells, The Sydney School of Accounting: The Chambers Years (Sydney: Sydney University). Walker, R.G. 1978. Consolidated Statements: A History and Analysis (New York: Arno Press). The Academy of Accounting  Historians has changed web platforms — look for us at  our new web address: http://www.aahhq.org/ 7Clarke: Sydney School of Accounting: 50th anniversaryPublished by eGrove, 2011

Sydney School of Accounting: 50th anniversary

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Sydney School of Accounting: 50th anniversary

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