activities in organizations serving community social needs. During the past year, our partners and managers have filled more than 500 leadership positions as officers, board members, trustees, or committee chairmen relative to educational institutions, federated fund drives, public school boards, local chambers of commerce, and civic, cultural, health, and welfare organizations. In Education Since we employ substantially all our professional personnel from colleges and universities at the time of graduation, we have a significant interest in the accomplishments of these schools and their faculties. In the past year, the partners, the firm, and the Arthur Andersen & Co. Foundation made cash contributions approximating $1,500,000 in support of colleges and universities. Other forms of assistance to colleges and universities included providing selected professors of accounting with practical experience and research opportunities in public accounting through faculty residencies, supplying firm books and other published materials to schools of business and their libraries, and providing fellowships for prospective accounting professors who are doctoral candidates at the dissertation stage. Qualified speakers from our partner and manager group were provided for faculty and student group meetings. The Arthur Andersen & Co. Foundation also provided financial assistance to students from minority groups and to the traditionally black colleges, and made grants for scholarships and other educational purposes as approved by its Board of Trustees. Stephen A. Elmore (left), a member of our professional staff, and Robert W Philip. Jr.. partner, visiting on the campus of Atlanta University Center. A characteristic of any profession is its reference to a body of specialized knowledge. The academic setting for accounting career-oriented programs is a question that has been less resolved for accounting than for other well-established professions. In recognition of the extensive consideration being given to schools and programs of professional accounting and of our interest in this educational development. in March, 1976, we announced a special program of assistance to universities which have established such schools and have had their academic programs accredited by either the American Institute of Certified Public Accountants or the American Accounting Association. One million dollars has been initially committed to this special program. Beginning in January, 1977, awards of $50,000 to $150.000 will be granted to assist such schools during their "start-up years to implement programs such as visiting professorships. leaves of absence for faculty members to extend their professional experience, library upgrading, scholarship support in the final year of the professional program, additional personnel for faculty support, and reimbursement of identifiable and incremental costs of initial accreditation for the professional accounting program Professional staff personnel attending a tax training session held at our Center for Professional Development Worldwide Financial Review Combined Financial Statements The accompanying combined financial statements have not been audited by another firm of independent public accountants. However, in addition to periodic internal audits conducted by the firm's internal auditors these financial statements were subjected to an external-type audit by a team of our audit partners. managers. and staffmembers who were not associated with the operations subject to their examination. The scope of the external-type audit was reviewed with the Audit Committee of the Public Review Board and was comparable in all respects to the audit scope we follow in examining client financial statements. Because it lacks independence. the audit team which conducted the external-type audit is not in a position to express an opinion on the combined financial statements. Acting upon a recommendation of our Pubhic Review Board to publish audited financial statements, we have appointed Haskins & Sells to make an independent audit of our financial statements for the year ending August 31. 1977. FEES in Millions of Dollars 450 400 224 510.000 208.283.000 78 Earnings for the year 99.021.000 101.123 000 87 240 000 13.5 The participants in worldwide earnings in fiscal 1976 included 921 partners. participating principals, non-United States principals, and overseas representatives active as of August 31. 1976, and 119 resigned and retired partners and estates of deceased partners. As indicated in the Combined Statement of Earnings, the compensation of partners for their services is not shown as an operating expense. As explained in the Chairman's Report. earnings for the year are not profit to the partners. Rather, they represent the amount available to cover partners' current compensation; resignation, retirement, and death payments: and return on capital at risk. Each partner must personally pay for retirement and payroll-type fringe benefits. To maintain a sound capital structure and working capital position, in June. 1976. the firm refinanced its existing long-term debt with a non client insurance company and borrowed an addtional $17,284,000 to increase its total unsecured long-term debt to the insurance company to $40,000,000. We also obtained a commitment for additional borrowings of $5.000.000 in 1979 and $5,000,000 more in 1980. During 1976 the part ners agreed to increase their paid-in cap-ta by 50% during the five years ending September 1 1980 In addition to our existing $15.000.000 line of credit with a nonclient bank, we aiso arranged a $10.000.000 multicurrency line of credit with that bank for use in countries outside the United States primarily to hedge foreign currency needs Net additions to property and equipment were $16,138.000 during 1976 and $10.049.0001975. Such additions included the $2.167 000 purchase of an IBM 370-158 computer for our Word Headquarters computer center and the purchase for $1,700,000 of a 20% interest in a partnersh which owns the Chicago office building in which we presently lease over 50% of the floor space Offices which made major moves or additions to their office space during 1976 included Bogotá. Chicago London, Phoenix, San Francisco, and São Paulo |