W. W. Werntz and the curious case of ASR No. 78 (1957): insights and lessons for historians

The Securities and Exchange Commission censured its former Chief Accountant, William W. Werntz, in a case involving his first audit after leaving the SEC. This study investigates the oddities and mysteries surrounding this case and the conclusions reveal lessons for accounting historians. One conclusion is that the establishment of accounting and auditing standards is conducted in a political environment. Further, individuals who work in this environment have complicated and, sometimes, adversarial past associations and some promote ideas out of positions of self-interest, personal animosities, or for the sake of appearances. Thus accounting historians are warned to be aware of the political and social facets that underlie events and actions when trying to discover the theory behind the rules and to also suspect that the position taken may not have been for ideological reasons. As with this episode, some mysteries may not be resolved because vital facts are not available and thus the most important warning is to gather facts while the witnesses are available to provide information.