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2
c. Materiality g. Disclosure
d. Conservatism
1- 5. Entity concept
1- 6. Generally accepted accounting principles do not apply when a firm does not
appear to be a going concern. If the decision is made that this is not a going
concern, then the use of GAAP would not be appropriate.
1- 7. With the time period assumption, inaccuracies of accounting for the entity,
short of its complete life span, are accepted. The assumption is made that the
entity can be accounted for reasonably accurately for a particular period of
time. In other words, the decision is made to accept some inaccuracy
because of incomplete information about the future in exchange for more
timely reporting. The statements are considered to be meaningful because
material inaccuracies are not acceptable.
1- 8. It is true that the only accurate way to account for the success or failure of an
entity is to accumulate all transactions from the opening of business until the
business eventually liquidates. But it is not necessary that the statements be
completely accurate in order for them to be meaningful.
1- 9. a. A year that ends when operations are at a low ebb for the year.
b. The accounting time period is ended on December 31.
c. A twelve-month accounting period that ends at the end of a month other than
December 31.
1-10. Money.
1-11. When money does not hold a stable value, the financial statements can lose
much of their significance. To the extent that money does not remain stable, it
loses usefulness as the standard for measuring financial transactions.
1-12. No. There is a problem with determining the index in order to adjust the
statements. The items that are included in the index must be representative.
In addition, the prices of items change because of various factors, such as
quality, technology, and inflation.
Yes. A reasonable adjustment to the statements can be made for inflation.
1-13. False. An arbitrary write-off of inventory cannot be justified under the
conservatism concept. The conservatism concept can only be applied where
there are alternative measurements and each of these alternative
measurements has reasonable support.

3
1-14. Yes, inventory that has a market value below the historical cost should be
written down in order to recognize a loss. This is done based upon the
concept of conservatism. Losses that can be reasonably anticipated should
be taken in order to reflect the least favorable effect on net income of the
current period.

4
1-15. End of production
The realization of revenue at the completion of the production process is
acceptable when the price of the item is known and there is a ready market.
Receipt of cash
This method should only be used when the prospects of collection are
especially doubtful at the time of sale.
During production
This method is allowed for long-term construction projects because
recognizing revenue on long-term construction projects as work progresses
tends to give a fairer picture of the results for a given period in comparison
with having the entire revenue realized in one period of time.
1-16. It is difficult to apply the matching concept when there is no direct connection
between the cost and revenue. Under these circumstances, accountants often
charge off the cost in the period incurred in order to be conservative.
1-17. If the entity can justify the use of an alternative accounting method on the
basis that it is rational, then the change can be made.
1-18. The accounting reports must disclose all facts that may influence the judgment
of an informed reader. Usually this is a judgment decision for the accountant
to make. Because of the complexity of many businesses and the increased
expectations of the public, the full disclosure concept has become one of the
most difficult concepts for the accountant to apply.
1-19. There is a preference for the use of objectivity in the preparation of financial
statements, but financial statements cannot be completely prepared based
upon objective data; estimates must be made in many situations.
1-20. This is a true statement. The concept of materiality allows the accountant to
handle immaterial items in the most economical and expedient manner
possible.
1-21. Some industry practices lead to accounting reports that do not conform to
generally accepted accounting principles. These reports are considered to be
acceptable, but the accounting profession is making an effort to eliminate
particular industry practices that do not conform to the normal generally
accepted accounting principles.
1-22. Events that fall outside of the financial transactions of the entity are not
recorded. An example would be the loss of a major customer.

5
1-23. True. The accounting profession is making an effort to reduce or eliminate
specific industry practices.
1-24. The entity must usually use the accrual basis of accounting. Only under
limited circumstances can the entity use the cash basis.
1-25. The FASB commenced the Accounting Standards Codification™ project to
provide a single source of authoritative U.S. GAAP and provide one level of
authoritative GAAP.
1-26. The separate entity concept directs that personal transactions of the owners
must be kept separate from their business transactions.
1-27. At the point of sale
1-28. a. The building should be recorded at cost, which is $50,000.
b. Revenue should not be recorded for the savings between the cost of $50,000
and the bid of $60,000. Revenue comes from selling, not from
purchasing.
1-29. The materiality concept supports this policy.
1-30. The Securities and Exchange Commission (SEC).
1-31. The basic problem with the monetary assumption when there has been
significant inflation is that the monetary assumption assumes a stable dollar in
terms of purchasing power. When there has been inflation, the dollar has not
been stable in terms of purchasing power, and therefore, dollars are being
compared that are not of the same purchasing power.
1-32. The matching principle deals with the costs to be matched against revenue.
The realization concept has to do with the determination of revenue. The
combination of revenue and costs determine income.
1-33. The term "generally accepted accounting principles" is used to refer to
accounting principles that have substantial authoritative support.
1-34. The process of considering a Statement of Financial Accounting Standards
begins when the Board elects to add a topic to its technical agenda. The
Board only considers topics that are "broken" for its technical agenda.
On projects with a broad impact, a Discussion Memorandum or an Invitation to
Comment is issued. The Discussion Memorandum or Invitation to Comment is
distributed as a basis for public comment. After considering the written
comments and the public hearing comments, the Board resumes deliberations

6
in one or more public Board meetings. The final Statement on Financial
Accounting Standards must receive a majority affirmative vote of the Board.
1-35. The FASB Conceptual Framework for Accounting and Reporting is intended to
set forth a system of interrelated objectives and underlying concepts that will
serve as the basis for evaluating existing standards of financial accounting and
reporting.
1-36. a. A committee of the AICPA that played an important role in the
determination of generally accepted accounting principles in the United
States between 1939 and 1959.
b. A committee of the AICPA that played an important role in the defining of
accounting terminology between 1939 and 1959.
c. An AICPA board that played a leading role in the development of generally
accepted accounting principles in the United States between 1959 and
1973.
d. The Board that has played the leading role in the development of generally
accepted accounting principles in the United States since 1973.
1-37. Concepts Statement No. 1 indicates that the objectives of general-purpose
external financial reporting are primarily for the needs of external users who
lack the authority to prescribe the information they want and must rely on
information management communicates to them.
1-38. Financial accounting is not designed to measure directly the value of a
business enterprise. Concepts Statement No. 1 indicates that financial
accounting is not designed to measure directly the value of a business
enterprise, but the information it provides may be helpful to those who wish to
estimate its value.
1-39. According to Concepts Statement No. 2, to be relevant, information must be
timely and it must have predictive value or feedback value, or both. To be
reliable, information must have representational faithfulness and it must be
verifiable and neutral.
1-40. 1. Definition
2. Measurability
3. Relevance
4. Reliability
1-41. 1. Historical cost
2. Current cost

7
3. Current market value
4. Net realizable value
5. Present value
1-42. The accrual basis income statement recognizes revenue when it is realized
(realization concept) and expenses recognized when they are incurred
(matching concept). The cash basis recognizes revenue when the cash is
received and expenses when payments are made.
1-43. True. Usually the cash basis does not indicate when the revenue was earned
and when the cost should be recognized. The cash basis recognizes cash
receipts as revenue and cash payments as expenses.
1-44. When cash is received and when payment is made is important. For example,
the timing of cash receipts and cash payments can have a bearing on a
company's ability to pay bills on time.
1-45. Sarbanes-Oxley Section 404 requires companies to document adequate
internal controls and procedures for financial reporting. They must be able to
assess the effectiveness of the internal controls and financial reporting.
1-46. The financial statements auditor must report on management’s assertion as to
the effectiveness of the internal controls and procedures as of the company’s
year end.
1-47. There have been many benefits for implementing Sarbanes-Oxley.
Companies have improved their internal controls, procedures, and financial
reporting. Many companies have improved their fraud prevention. Systems
put in place to review budgets will enable companies to be more proactive in
preventing problems and improve their ability to be proactive. Users of
financial statements benefit from an improved financial product that they
review and analyze to make investment decisions.
1-48. Private companies are not required to report under Sarbanes-Oxley.
1-49. In many instances, the natural business year of a company ends on December
31. Other businesses use the calendar year and thus end the accounting on
December 31. For a fiscal year, the accounting period closes at the end of a
month other than December.
1-50. Accounting Trends & Techniques is a compilation of data obtained by a survey
of 600 annual reports to stockholders undertaken for the purpose of analyzing
the accounting information disclosed in such reports.
1-51. The Sarbanes-Oxley Act of 2002 has put demands on management to detect
and prevent material control weaknesses in a timely manner.

8
1-52. The PCAOB is the private sector corporation created by the Sarbanes-Oxley
Act of 2002. They are responsible for overseeing the audits of public
companies. They have broad authority over public accounting firms and
auditors. Their actions are subject to the approval of the Securities and
Exchange Commission.
1-53. The Serious concerns were about the cost of adoption, the benefits of
adoption compared to convergence, and whether IFRS were in fact as good as
or better than U.S. GAAP.
1-54. The Financial Accounting Standards Board (FASB) and the International
Accounting Standards Board (IASB) met jointly in Norwalk, Connecticut on
September 18, 2002. They acknowledge their commitment to the
development of high-quality, compatible accounting standards that could be
used for both domestic and cross-border financial reporting (this is known as
the Norwalk Agreement).
1-55. The American Accounting Association Committee on Financial Reporting
Policy concluded that eliminating the reconciliation in requirements was
premature. Several of their points follow:
1. Material reconciling items exist between U.S. GAAP and IFRS and the
reconciliation currently reflects information that participants in U.S. stock
markets appear to impound to stock prices.
2. Cross-country institutional differences will likely result in differences in the
implementation of any single set of standards.
3. Legal and institutional obstacles inhibit private litigation against foreign
firms in the United States and the SEC rarely undertakes enforcement
actions against cross-listed firms.
4. Differential implementation of standards across countries and a differential
enforcement efforts directed toward domestic and cross-listed firms creates
differences in financial reporting even with converged standards.
5. Harmonization appears to be occurring via the joint standard-setting
activities of the FASB and the IASB; thus, special statutory intervention by
the SEC appears to be unnecessary.
1-56. Professor Ball noted these problems with implementing IFRS:
1. On the con side, a deep concern is that the differences in financial
reporting quality that are inevitable among countries have been pushed
down to the level of implementation and now will be concealed by a veneer
of uniformity.
2. Despite increased globalization, most political and economic influences on
financial reporting practice remain local.

9
3. The fundamental reason for being skeptical about uniformity of
implementation in practice is that the incentives of preparers and enforcers
remain primarily local.
4. Under its constitution, the IASB is a standard setter and does not have an
enforcement mechanism for its standards.
5. Over time the IASB risks becoming a politicized, polarized, bureaucratic
on-style body.
1-57. 2009. The issue of SMEs is not part of the roadmap of convergence between
IFRSs and U.S. GAAP.

10
PROBLEMS
PROBLEM 1-1
1. b 3. h 5. d 7. e 9. g
2. a 4. c 6. i 8. f
PROBLEM 1-2
1. o 6. e 11. h
2. a 7. f 12. k
3. b 8. j 13. c
4. l 9. i 14. m
5. d 10 g 15 n
PROBLEM 1-3
a. 2 Typically, much judgment and estimates go into the preparation of financial
statements.
b. 4 Financial accounting is not designed to measure directly the value of a
business enterprise. The end result statements can be used as part of the
data to aid in estimating the value of the business.
c. 4 FASB Statement of Concepts No. 2 lists timeliness, predictive value, and
feedback value as ingredients of the quality of relevance.
d. 2 The Securities and Exchange Commission has the primary right and
responsibility for generally accepted accounting principles. They have
primarily elected to have the private sector develop generally accepted
accounting principles and have designated the Financial Accounting
Standards Board as the primary source.
e. 4 The concept of conservatism directs that the measurement with the least
favorable effect on net income and financial position in the current period be
selected.
f. 3 The Internal Revenue Service deals with Federal tax law, not generally
accepted accounting principles.
g. 5 Opinions were issued by The Accounting Principles Board.

11
PROBLEM 1-4
a. 1 Statements of Position have been issued by the AICPA.
b. 2 This is the definition contained in SFAC No. 6
c. 2 This is the definition contained in SFAC No. 6.
d. 5 Comparability is not one of the criteria for an item to be recognized.
e. 2 Future cost is not one of the measurement attributes recognized in SFAC
No. 5.
f. 1 Revenue is usually recognized at point of sale.
g. 1 Financial accounting is not designed to measure directly the value of a
business enterprise.
PROBLEM 1-5
a. Sales on credit $ 80,000
Cost of inventory sold on credit (65,000)
Payment to sales clerk (10,000)
Income $ 5,000
b. Collections from customers $ 60,000
Payment for purchases (55,000)
Payment to sales clerk (10,000)
Loss $(5,000)
PROBLEM 1-6
1. a 6. d 11. l 16. g
2. r 7. f 12. m 17. e
3. o 8. h 13. p 18. c
4. q 9. i 14. n 19. s
5. b 10. j 15. k

12
CASES
CASE 1-1 STANDARD-SETTING: "A POLITICAL ASPECT"
(This case provides an opportunity to view some of the political aspects of standard
setting.)
a. The hierarchy of accounting qualities in SFAC No. 2 includes neutrality as one of the
ingredients. SFAC No.2 indicates that, to be reliable, the information must be
verifiable, subject to representational faithfulness, and neutral.
To quote from the Beresford letter: "If financial statements are to be useful, they must
report economic activity without coloring the message to influence behavior in a
particular direction."
b. Costs of transactions do exist whether or not the FASB mandates their recognition in
financial statements. The markets may not be able to recognize these costs in the
short run if they are not reported. Thus investors, creditors, regulators, and other
users of financial reports may not be able to make reasonable business and
economic decisions if the costs are not reported.
c. Much of the standard setting in the U.S. is in the private sector. A major role in the
private sector has been played by The American Institute of Certified Public
Accountants. Since 1973 the primary role in the private sector has been played by
The Financial Accounting Standards Board.
It should be noted that the Securities Act of 1934 gave the SEC the authority to
determine generally accepted accounting principles and to regulate the accounting
profession. The Beresford letter recognizes that the SEC and congressional
committees maintain an active oversight of the FASB.
d. True. Quoting from the letter: "We expect that changes in financial reporting will
have economic consequences, just as economic consequences are inherent in
existing financial reporting practices."

13
CASE 1-2 POLITICIZATION OF ACCOUNTING STANDARDS – A NECESSARY
ACT?
(This case addresses the role of the Emergency Economic Stabilization Act of 2008 and
the subsequent role of the SEC and the FASB).
a. This is an opinion question:
A review of the accounting standard was likely justified considering the economic
situation. Should the review have been done by the SEC or FASB independently of
congress?
b. Yes. The SEC has the authority to govern GAAP in the U.S. A case could be made
that the SEC should have acted sooner.
c. As indicated in (b), the SEC has the authority to govern GAAP.
d. No. The time frame was very short.
e. Probably not. In the long run, the involvement of congress is likely to be negative.
CASE 1-3 INDEPENDENCE OF ACCOUNTING STANDARD-SETTERS
(This case provides a forum to discuss the independence of accounting standard-
setters. The timing of this case (December 2008) was during the period when congress
was putting pressure on the SEC and the FASB to address the standard for fair value
accounting). Some politicians and others thought that a standard change was needed
to overt material write down of investments by financial institutions).
a. Standard setters have traditionally resisted using accounting standards as a fiscal
policy tool. Standard setters have tried to use standards as a neutral and objective
measurement of the financial performance of public companies.
b. Should the deliberative process be waived when a national emergency exists in the
financial system?
Note: In an Op Ed in the Washington Post, author A. Levitt, a former SEC chair, clearly
disapproved of FASB’s expedited due process for new fair value guidance in FAS
157-e.

14
CASE 1-4 LOOKING OUT FOR INVESTORS
(The SEC plays an important role in “Looking Out for Investors.” This case provides an
opportunity to discuss that role).
a. Mary Schapiro addresses some of the cost of over-regulation as stifling of innovation
and the superior ability of markets to protect themselves from excess. Over
regulation will be costly for businesses because compliance costs tend to be high
and compliance sometimes takes time to put those controls into place e.g. internal
controls related to Sarbanes-Oxley.
b. Under-regulation can result in inefficient capital markets. To ensure that capital
markets are efficient, Mary Schapiro indicates that the SEC will approach this in four
ways as follows:
1. First, structured effectively
2. Second, that they’re fed by timely and reliable information
3. Third, that they’re well-served by financial intermediaries and other market
professionals
4. And fourth, that they’re supported by a strong and focused enforcement arm that
will not be afraid to prosecute securities fraud.
c. This is an opinion question.
CASE 1-5 FLYING HIGH
(This is a good case to discuss revenue recognition and compare program accounting
with the percentage of completion and completed contract method of revenue
recognition used by contractors.)
a. It would be difficult to separate contracts that contain provisions to earn incentive
and award fees that can be reasonably estimated from contracts that cannot be
reasonably estimated.
b. It appears that Boeing Company is using a completed contract method for
commercial airplanes. It does not represent a difficult situation in determining sales,
but sales may not be representative of the production for any particular time period.
They are estimating costs of sales while sales are based on deliveries.
c. It is probably not difficult to determine service revenue. The service likely does not
represent a long period of time.

15
d. It should not be difficult to determine revenue from notes receivable. The terms of
the notes would be objective.
CASE 1-6 CENTERED IN HAWAII
(This is a good case to discuss revenue recognition.)
a. “In general, the Company recognizes revenue when persuasive evidence of an
arrangement exists, delivery of the service or product has occurred, the sales price
is fixed or determinable, and collectability is reasonably assured.
b. Voyage Revenue Recognition.
Yes, this could represent a challenge of matching cost with revenue.
We likely have a situation here where expenses are incurred approximately at the same
rate as the recognition of revenue.
c. Yes.
Appears to be a type of percentage-of-completion method.
d. 1. Generally on closing date, “adequate initial and continuing investments have
been received and collection of remaining balances, if any, is reasonably
assured.
2. Percentage-of-completion method.
Used when there is material continuing post-closing involvement.
e. In general, recognizing revenue as rent over the time of the lease.
For revenue related to contingent sales, the revenue is recognized only after the
contingency has been resolved.
CASE 1-7 GOING CONCERN?
a. The going-concern assumption is that the entity in question will remain in business
for an indefinite period of time.

16
b. Yes. The potential problem is that the firm may not be able to continue in business
as a going concern. This puts into question the recoverability and classification of
assets or the amounts and classification of liabilities.
c. This disclosure puts the user of the statements on warning that the statements may
be misleading if the company cannot continue as a going concern.
CASE 1-8 ECONOMICS AND ACCOUNTING: THE UNCONGENIAL TWINS
a. No. Per Kenneth E. Boulding:
"Ritual is always the proper response when a man has to give an answer to a question,
the answer to which he cannot really know. Ritual under these circumstances has
two functions. It is comforting (and in the face of the great uncertainties of the
future, comfort is not to be despised) and it is also an answer sufficient for action."
b. No. Per Kenneth E. Boulding:
"The wise businessman will not believe his accountant although he takes what his
accountant tells him as important evidence. The quality of that evidence, however,
depends in considerable degree on the simplicity of the procedures and the
awareness which we have of them."
c. Per Kenneth E. Boulding:
"It is the sufficient answer rather than the right answer which the accountant really
seeks."
Boulding indicates that accounting does not need to be accurate in order to serve a
useful function. The financial statements does not attest that they are correct only
that they are presented fairly in accordance with generally accepted accounting
principles.
CASE 1-9 I OFTEN PAINT FAKES
(This case is intended to serve as a forum for discussing the accuracy of financial
statements prepared using generally accepted accounting principles.)
a. Accounting reports prepared using generally accepted accounting principles are not
exactly accurate. They are intended to be sufficient to aid in making informed
decisions. Reports are only as good as the underlying numbers. If numbers are not
reliable, then it doesn’t matter if GAAP is properly applied.

17
b. No, accountants do not paint fakes. But, it may take an understanding of generally
accepted accounting principles to reasonably comprehend the significance of the
statements.
CASE 1-10 OVERSIGHT
(This case reviews selected sections of the Sarbanes-Oxley Act.)
a. Securities and Exchange Commission
b. The Securities and Exchange Commission oversees the Public Company
Accounting Oversight Board.
c. The Public Company Accounting Oversight Board oversees the audits and related
matters of public companies that are subject to the securities laws, and related
matters. The intent is to protect the interests of investors and further the public
interest in the preparation of informative, accurate, and independent audit reports for
companies, the securities of which are sold to, and held by and for public investors.
d. Title 1
Sec. 101
(b) Duties of the Board
The Board shall, subject to action by the Commission under section 107, and once a
determination is made by the Commission under subsection (d) of this section -
-
(1) register public accounting firms that prepare audit reports for issuers, in
accordance with section 102;
(2) establish or adopt, or both, by rule, auditing, quality control, ethics,
independence, and other standards relating to the preparation of audit
reports for issuers, in accordance with section 103;
(3) conduct inspections of registered public accounting firms, in accordance
with section 104 and the rules of the Board;
(4) conduct investigations and disciplinary proceedings concerning, and
impose appropriate sanctions where justified upon, registered public
accounting firms and associated persons of such firms in accordance with
section 105;

18
(5) perform such other duties or functions as the Board (or the Commission, by
rule or order) determines are necessary or appropriate to promote high
professional standards among, and improve the quality of audit services
offered by, registered public accounting firms and associated persons
thereof, or otherwise to carry out this act, in order to protect investors, or to
further the public interest;
(6) enforce compliance with the Act, the rules of the Board, professional
standards and the securities laws relating to the preparation and issuance
of audit reports and the obligations and liabilities of accountants with
respect thereto, by registered public accounting firms and associated
persons thereof; and
(7) set the budget and manage the operations of the Board and the staff of the
Board
e. Public accounting firms that prepare or issue, or participate in the preparation or
issuance of, any audit report with respect to any issuer.
f. Sec 104
(a) In General – The Board shall conduct a continuing program of inspections to
assess the degree of compliance of each registered public accounting firm
and associated persons of that firm with this Act, the rules of the Board, the
rules of the Commission, or professional standards in connection with its
performance of audits, issuance of audit reports, and related matters
involving issuers.
g. Sec 103
(a) (1) …amend or otherwise modify or alter, such auditing and related
attestation standards, such quality control standards, and such ethics
standards to be used by registered public accounting firms in the
preparation and issuance of audit reports, as required by this Act or the
rules of the Commission, or as may be necessary or appropriate in the
public interest or for the protection of investors.
h. Sec 106
(a) (1) In General
Any foreign public accounting firm that prepares or furnishes an audit
report with respect to any issuer, shall be subject to this act and the rules
of the Board and the Commission issued under this Act, in the same
manner and to the same extent as a public accounting firm that is
organized and operates under the laws of the United States or any state,
except…
i. Recognition of Accounting Standards

19
(1) In General – In carrying out its authority under subsection (a) and under
section 13(b) of the Securities Act of 1934, the Commission may recognize,
as generally accepted for purposes of the securities laws, any accounting
principles established by a standard setting body…
j. Funding
1. The “Board” – annual accounting support fee for the Board (among issuers)
2. Financial Accounting Standards Board – Annual Accounting Support for
Standard Setting Body (among issuers)
k. Title 11
Sec 201
Non-audit service excluded
(1) bookkeeping or other services related to the accounting records or financial
statements of the audit client;
(2) financial information systems design and implementation;
(3) appraisal or valuation services, fairness opinions, or contribution-in-kind
reports;
(4) actuarial services;
(5) internal audit outsourcing services;
(6) management functions or human resources;
(7) broker or dealer, investment adviser, or investment banking services;
(8) legal services and expert services unrelated to the audit; and
(9) any other service that the Board determines, by regulation, is impermissible.
Tax services for an audit client
Only if the activity is approved in advance by the audit committee of the issuer, in
accordance with subsection (i)
l. Title IV
Sec 404 Management Assessment of Internal Controls
(a) …each annual report… contain an internal control report, which shall –
(1) state the responsibility of management for establishing and maintaining
an adequate internal control structure and procedures for financial
reporting; and
(2) contain an assessment, as of the end of the most recent fiscal year of
the issuer, of the effectiveness of the internal control structure and
procedures of the issuer for financial reporting
m. Management does not like the responsibility relating to internal controls and
management may not have very much expertise in this area.

20
CASE 1-11 REGULATION OF SMALLER PUBLIC COMPANIES
a. There is substantial cost to a company to comply with the SEC securities
regulations. These costs could result in companies leaving the United States to
avoid the SEC regulations.
Companies could also decide to go private, which would reduce the number of
securities available to the public.
Companies could also decide to go out of business.
CASE 1-12 STABLE FUNDING
(This case provides for a discussion of the importance of stable funding for standard
setters.)
a. The FASB is funded through the issuer accounting support fee since enactment of
Sarbanes-Oxley.
b. The Dodd-Frank Act recognized the importance of sufficient and stable resources by
authorizing the commission to require a national securities association to fund the
GASB by establishing directed FINRA to establish this fee which will strengthen the
independence of GASB).
(Note: This fee has likely been established).
c. IASB (IFRS) does not have stable funding mechanisms.
CASE 1-13 RULES OR FEEL?
(This case provides the opportunity to compare the IFRSs more principles-based GAAP
with the U.S. rules-based GAAP.)
a. U.S. accounting standards consist of hundreds of pages of rules. The principles-
based approach (a broad-brush approach) relies more on companies to reasonably
apply the rules and using their professional judgment. Some maintain that
principles-based approach would result in more lawsuits because of the subjectivity
of professional judgment. Others maintain that a principles-based approach would
result in fewer lawsuits.
b. This is an opinion question. Several reasons for giving up U.S. GAAP should be
given along with several reasons for not giving up U.S. GAAP.

21
CASE 1-14 PCAOB ENFORCEMENT – IFRS STANDARDS
(This case is intended to serve as a forum for discussing enforcement under an IFRS
environment.)
a. It will be more difficult for the PCAOB to enforce standards under an IFRS
environment.
b. If the only attempt at enforcement is in the United States, then companies in the
United States will be at a disadvantage in an IFRS environment.

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Title: The Isthmus of Suez Question
Author: Ferdinand de Lesseps
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*** START OF THE PROJECT GUTENBERG EBOOK THE ISTHMUS OF
SUEZ QUESTION ***

THE
ISTHMUS OF SUEZ
QUESTION.
THE
ISTHMUS OF SUEZ
QUESTION.
BY
M. FERDINAND DE LESSEPS,
MINISTER PLENIPOTENTIARY.
“APERIRE TERRAM GENTIBUS.”
LONDON:
LONGMAN, BROWN, GREEN, AND LONGMANS.
PARIS:
GALIGNANI AND CO.
1855.

CONTENTS.
Page
The Question Submitted 7
APPENDIX.
No.
I. M. De Lesseps’ Memorial to the Viceroy 18
II. Firman of Concession 28
III. M. De Lesseps’ Instructions to the Engineers 52
IV. Precursory Scheme 58
V. Letter from the Grand Vizier to the Viceroy 170
VI. M. De Lesseps’ Report 174
VII. Opinion of Mr. Anderson 182
VIII. Opinion of Captain Vetch 204
IX. Article from the Moniteur 212

Explanation of the French Monies,
Weights, and Measures used in the
following pages.
1 Franc = about 9½ d. or, 25 fr. = 1£.
81 Livres = 80 francs.
1 Quintal = about 220½ lbs.
1 Metre = 39⅜ inches nearly.
1 Kilometre = about 1093⅔ yards, or nearly 5 furlongs.
1 Hectare = 2 acres, 4712, or nearly 2½ acres.
1 Litre about 1¾ pint.
The figures following the denomination are decimal parts; thus: 7
fr. 25, 6 met. 50 represent respectively 7¼ francs, 6½ metres.

THE ISTHMUS OF SUEZ QUESTION
SUBMITTED TO THE PUBLIC OPINION OF
ENGLAND.
“Aperire terram gentibus.”
In the month of October, 1854, I left Europe for Egypt, in
consequence of an invitation I had received from the new Viceroy,
Mohammed Saïd, who for twenty years has honoured me with his
friendship. I had no mission from my Government. It was in the
course of a journey across the Libyan desert from Alexandria to
Cairo which I made in company with the Prince, that the question of
cutting through the Isthmus of Suez, was for the first time mooted
between us. He requested me to draw up a memorial on the subject,
(Appendix, No. 1) and, as my ideas met with his approbation, he
issued to the Consuls General of foreign powers a firman (Appendix,
No. 2), destined to receive the sanction of the Sultan, granting to a
company composed of the capitalists of all nations without
distinction, the right to construct a canal between the two Seas. Mr.
Bruce, the agent of the British Government, was the first of the
Consuls General who was informed of the Viceroy’s project, so that
France and England received intimation of it at the same time.
MM. Linant Bey and Mougel Bey, engineers, who have been
engaged, the one for the last twenty, the other for the last thirty
years, in the construction of important hydraulic works in Egypt,
were appointed by the Viceroy to accompany me in an exploring
expedition to the Isthmus of Suez, and to complete, by a fresh
examination of the ground, the investigations they had already
made.
This expedition was made during last December and January;
after presenting an account of it to His Highness Mohammed Saïd, I

gave instructions (Appendix, No. 3), in his name, to the engineers,
calculated to assist them in the preparation of their report.
In the month of March, MM. Linant Bey and Mougel Bey delivered
the precursory scheme (Appendix, No. 4), which quite convinced the
Viceroy of the possibility of executing this great undertaking in which
he has taken the initiative. They establish by calculations and data,
which may be verified by any one, that a maritime canal direct from
Suez to Pelusium thirty leagues long, one hundred metres wide, and
eight metres deep, extending sufficiently far into the two seas by
means of jetties, to obtain the depth necessary to enable ships to
enter without difficulty, having an inland port in the natural basin of
Lake Timsah, and which should be completed in six years, would
cost, at the most, 160,000,000 francs, (£6,400,000); or, about half
the amount expended on the Great Northern railway from London to
York, or on that between Paris and Lyons.
In a journey that I made to Constantinople,[1] I ascertained that
the Sultan and his ministers were favourable to the project, and I
delivered to the Viceroy a letter from the Grand Vizier, in which he
aptly characterized the opening of the Isthmus of Suez by a
maritime canal as a work of the most useful and interesting
character. (Appendix, No. 5.) His Highness immediately transmitted
to the Divan, the documents, maps, and plans necessary for
understanding the question of construction, and which were required
for obtaining the sanction of the Sovereign.
I was then commissioned to return to Europe for the purpose of
calling public attention to the subject and to take measures for
organizing the undertaking, on a cosmopolitan basis in accordance
with the principles which have from the commencement guided the
projectors.
Prince Mohammed Saïd has declared in his instructions (Appendix,
No. 6), that the labours of his engineers, who at this moment are
engaged in preparing their definitive scheme, shall be submitted to
the judgment of engineers, chosen from England, from France, from
Holland, from Germany, and from Italy; and that the organization of

the Universal Company entrusted with the construction of the Canal
shall be based upon the scientific decision of Europe.
Until then no call will be made on the shareholders, and, the
administration of the Company being in the hands of capitalists and
other persons of all nations, in proportion to the relative commercial
importance of their country, they will not support the undertaking
unless they are convinced that it will be to their interest to do so.
As England is evidently interested more than any other power in
the construction of a canal through the Isthmus of Suez, my first
step has been to come to London, both in order to ascertain the
state of public opinion in England on this question, and also to give
to all who desire it such information as will enable them fully to
appreciate the moral and material aspects of the undertaking.
I have already remarked with satisfaction that, in general, men of
intelligence with whom I have had the honour of conversing on the
subject, do not admit that an event which would advance the
interests of the whole world, could possibly do injury to the power or
commerce of England. They frankly discard all idea of a prejudice
against the project; they assert on the contrary, that if feasible their
country cannot but gain by it, and that it would be a source of regret
if the idea were entertained in France that what would be beneficial
to other countries should not be of equal benefit to England.
Objections, however, which to my mind, I am proud to
acknowledge, do honour to the candour of English politicians, have
been made, in perfectly good faith, and without any feeling of
distrust towards a friendly nation, the alliance with which, cemented
by the blood of their brave armies, has been recently sanctioned by
the unanimous demonstration of the English people, as it will shortly
be by the people of France.
I shall reproduce these objections, and reply to them in very few
words.
I begin by setting aside all those which relate to the supposed
impossibility of execution, and to the idea that the canal can only be

constructed at an expenditure out of proportion to the advantages
reasonably to be expected.
If the canal should be found to be physically impossible, of course
the scheme will not be entertained, and if European science should
not make it clear that the advantages to be derived are
commensurate with the expenses to be incurred, capitalists will not
come forward.
The report of the engineers replies triumphantly to other
objections respecting the sands of the desert, the alluvial deposits at
Pelusium and Suez, and the navigation of the Red Sea.
It has been affirmed that the project of a canal might retard the
construction of a railway from Alexandria to Suez, which the policy
of England has always considered essential to her Indian interests.
Far from being retarded by the canal project, the railway will, on
the contrary, be indebted to this very design, for its speedy
completion; for it can only obtain sufficient returns from the activity
occasioned by a considerable maritime commerce across the
Isthmus of Suez. The Egyptian Government, which has already
completed, at its own expense, the first two sections of the railway,
viz., from Alexandria to the Nile, and from the Nile to Cairo, takes
this view of the question, and is at the same time desirous of giving
satisfaction to England, whose main object is to secure for her
despatches and travellers the most direct and speedy route. The
Viceroy, being thus persuaded, that of the two undertakings, the
railway and the canal, each forms the complement of the other, has
just decided on the completion of the third section, from Cairo to
Suez. He has given the order for the rails to an English house, and
engineers are at this moment engaged in levelling and in the
superintendence of the earth-works.
It has also been said that if a considerable number of European
workmen, or agricultural labourers, were taken to the Isthmus of
Suez, there would be some fear of their forming a colony of natives
of one single country—of France for instance—which might have a

prejudicial effect on the policy of England. In the first place, there is
no motive for a universal company to employ, for a special political
object, workmen of any one country in preference to those of any
other. Again, it is not necessary to demonstrate that a company of
capitalists will attend to their own interests, and they will certainly
have an incontestable advantage in employing Egyptians only, as
workmen and agricultural labourers. The fellah of Egypt has alone
constructed, under the direction of skilful and experienced engineers
and foremen, all the extensive works undertaken in that country, and
no nation can more easily, or on more favourable terms, furnish
disciplined armies, of robust, active, and intelligent workmen,
equally fit for the construction of canals, for hydraulic and for
agricultural operations.[2]
But what is of greater moment, and indeed alone deserves the
consideration of a people who have the fortunate custom of
interesting themselves in their political affairs, is the apprehension
conscientiously entertained by statesmen, whose right and whose
duty it is to ask themselves and maturely to consider:—
1. Whether shortening the distance by 3000 leagues for all the
countries of Northern Europe, and by 3400 leagues on an average
for the ports of the Mediterranean, including Malta, may not in
future, in case of war, menace the safety of the British possessions
in India.
2. Whether the commercial and maritime relations of Great Britain
will not be disadvantageously affected by the opening of a new
route, which, while shortening the distance for her own navigation,
will at the same time facilitate and increase the navigation of all
other nations towards the extreme East.
The following passage from a recent publication replies to these
objections:—
“The power in possession of Aden opens and shuts at its will the
Red Sea, and if it is true that the influence of nations and
governments chiefly depends on the good they can do to their

friends and the harm they can do to their enemies, that revolution
would be of no slight advantage to England which would lead the
principal current of the world’s commerce under the guns of her
ships and the batteries of her fortresses. Besides, is it from the naval
armaments of the Mediterranean that England has most reason to
fear an invasion of India? It requires no more than ordinary foresight
to perceive, that if her Indian possessions were ever seriously
threatened, it could only be from Russia by land, and from North
America by sea. In either case, the safety of her possessions would
depend on the shortening of her line of operations.
“India is not the only British possession to which the route will be
abridged by the passage viâ Suez. Australia will profit no less by the
change; and it will be all the more necessary to facilitate the defence
of that country, as it will become, if the cutting through of the
Isthmus of Panama be effected, more accessible to the ships of war
of the United States.
“We may conclude from these observations, that there would be
small risk of the opening of the Isthmus of Suez weakening the
military power of Great Britain. Her commercial power could only be
compromised by it, if it were possible for the multiplicity of her
transactions with the East Indies to be decreased by shortening the
intervening distance by 3000 leagues, or if it were possible for the
producers and sellers of the commodities of the extreme East to lose
by the consumption of them in Europe being doubled.
“If England must gain by the opening of the Isthmus an increase
of military and commercial power, the genius of calculation within
her will soon triumph over an ill-considered opposition. She will not
sacrifice the positive elevation, the basis of which is enlarged by the
developement of what surrounds it, to that relative elevation which
is satisfied with the degradation of others, and she will not give any
one the right to attribute to her, with regard to all the nations
bordering on the Mediterranean, the language lately addressed by
the Emperor Nicholas to the English Minister on the subject of
Greece, and of the East. Such a policy she leaves to its fitting home.

She does more, she opposes it by force of arms. Convinced that her
strength lies in her power of expansion, and in her commercial
capabilities, she endeavours by the prosperity of her neighbours to
enlarge the basis of her own, and for this reason it is that she
animates with her co-operation so many enterprises which enrich
the Continent; no undertaking that she has ever assisted will prove
more productive of beneficial results to herself than the operations
at the Isthmus of Suez.”
To the preceding quotation, which is conclusive, I add some
figures which also have their value.
The Mediterranean ports will profit, it is true, by the opening of
the Isthmus of Suez, but England with the 5,000,000 tons employed
in her commerce—a tonnage greater than that of all the navies of
Europe, including France, united—cannot fail to profit in a much
greater degree by the increase of relations which must necessarily
result from the shortening of the distance between the points of
traffic; to this opening moreover she will be indebted for the
inestimable advantage of finding herself in closer connection with
her colonies, than another nation whose competition might
otherwise be really formidable in the eyes of the upholders of an
exclusive system.
But on the contrary, England, adopting the policy of commercial
freedom, has been seen to favour the attempts which have been
made to cut through the American Isthmus, although, if successful,
it would bring the United States nearer the British possessions in
India and still nearer to Australia. She is not, however, ignorant of
the fact that the maritime commerce of the United States, which
twenty years ago employed only 1,000,000 tons, now, in 1854,
requires no less than 5,400,000, and that this vast tonnage, already
larger than her own, is constantly increasing. But England on her
part does not remain at a stand-still, and she has done well in
showing no fear of the contest. The law of progress has been
justified by official statistical documents. The burthen of the English
ships built in 1842 was 130,000 tons; in 1843, shipping to the

amount of 203,000 tons was built. It is especially since the relations
of the United States with the Indian Seas have been extended, that
the commerce of Great Britain has in those very regions experienced
a still farther developement. Thus, the imports from the Indian
Peninsula, which in 1849 amounted to £9,238,000, had in 1853
increased to £13,610,000. Those from China, which in 1849 were
£6,200,000, rose in 1853, to £8,300,000. Again, the tonnage
employed in the trade between Great Britain and her Eastern
possessions, including the other countries in the Indian Seas, to and
fro, amounted in 1849 to 967,076, and in 1853 to 1,595,138 tons.
It may perhaps not be superfluous to reply to those persons who
still believe in the supposed monopoly which they think it advisable
for England to retain in her commerce with the East; we have just
seen that there is in fact no such monopoly as far as the United
States are concerned, and that England does not suffer from the
want of it. It is the same with respect to Europe. This state of things
has a tendency to increase every day, even with the existing means
of communication by the Cape of Good Hope and the imperfect
transit through Egypt. Marseilles, Bordeaux, Havre, Genoa, Trieste,
Amsterdam, Rotterdam, and Hamburg, all despatch vessels direct to
the Indies. Marseilles and Trieste now receive, viâ Egypt, cases of
indigo from India and bales of silk goods from China. Powerful
companies, in anticipation of peace, are at this moment engaged in
building ships expressly for trading to the East, or else in devoting to
that purpose the steamers and sailing vessels now used as
transports in the Black Sea.
Other objections have been made, and as they have been
seriously brought forward, I cannot allow them to pass without
remark. Some very modest Englishmen have compared their country
to Venice, and have contended, that if Venice lost her power by the
discovery of the Cape of Good Hope, England would see hers decline
by a return to the shortest route. In the first place, the shortest
route is a geographical fact which no one can get rid of, and, from
the moment that it is ascertained that no material obstacle prevents
the opening of this direct line, it will not be for any Government,

much less for the one which has inaugurated the era of commercial
freedom, to oppose the realization of a work which will satisfy the
interests of all. Then, Great Britain in the nineteenth century cannot
be compared to Venice in the fifteenth: the latter, in consequence of
her defeats in 1291 and 1298, had been obliged to cede the
supremacy to Genoa, and, after having still shone in the first rank
when she put herself at the head of the league against Charles VIII.
(1495), finally lost her preponderance when the Portuguese
destroyed her fleets in the Red Sea, and the Emperor, the Pope and
the kings of France and Aragon formed the league of Cambray
against her (1508). It would be useless to prove by historical
evidence that the decline of the Queen of the Adriatic was due to
other causes than the discovery of the Cape (1497), by which she
might have profited as well as the Portuguese, if she had had the
same elements of strength and vitality. Trieste, which has succeeded
to her commercial prosperity, and even surpassed it, has had no
need of the re-establishment of the ancient route to India. If Trieste
participates largely, as is to be hoped, in the advantages of the
Isthmus Company, if her neighbour of the Adriatic finds therein a
new life, Great Britain will lose nothing thereby. Has it ever been
seen that a capital city, brought into communication with a great
market by a railroad, has had to regret the shortening of the
distance and the amelioration of its own relations, because some
secondary towns on the line were nearer to the market and
participated in the common benefit?
Marseilles, Trieste, Greece, the ports of Italy, of Spain and of
Turkey, are nearer to Egypt than London and Liverpool. Well; in the
present state of the relations of Europe with Alexandria, England
absorbs to herself alone half the value of the commerce between all
other countries and Egypt, and her tonnage comprises two-thirds of
the navigation to and fro under all flags.
I wrote the following from Cairo, December 3rd, 1854, to a friend
of mine, a member of the British Parliament.

“Some persons assert that the Viceroy of Egypt’s project will meet
with opposition in England. I cannot believe it: your statesmen are
too enlightened for me to entertain such a supposition under present
circumstances. What! England herself transacts more than half the
general commerce with India and China; she has an immense
empire in Asia; she may reduce by one-third the charges on her
commerce, and bring that Eastern Empire nearer by one-half; and
she would not allow it to be done. Wherefore? To prevent the
Mediterranean nations from taking advantage of their situation to
increase their commerce in the Eastern Seas,—she would deprive
herself of the immense advantages which must accrue to her, in
material respects, and in a political point of view, from this new
communication, solely because others are more favourably situated
than herself, as if geographical position was all-in-all, and as if,
everything considered, England had not more to gain by this work
than all the nations together. Finally, England, it is said, must dread
the reduction in the number of vessels employed in Indian
commerce which would result from the diminution of more than one-
third in the duration of the voyage. And has not England proved in
her experience of railways, by results which have surpassed the
boldest anticipations, that the necessary consequence of shortening
the distance and diminishing the duration of a journey, is the infinite
augmentation of intercourse and circulation. One cannot understand
why those who entertain this fear do not advise the English
Government to direct, that the voyage to India now shall be viâ
Cape Horn, for that would employ still more ships than the way by
the Cape of Good Hope and furnish better sailors.
“If, as is not unlikely, the difficulties with which I am threatened
should be brought forward, public opinion, so powerful in England,
will soon do justice to interested opposition and superannuated
objections.”
Her Majesty’s Government concluded with the United States, on
the 19th of April, 1850, a treaty of neutrality for the projected canal
through the American Isthmus. The cabinets of London and Paris are
now on such intimate terms as to make it a matter of no difficulty

for them to agree upon a convention, if it suited their political
interests to do so, relative to the passage of the Isthmus of Suez,
assimilating it to that of the Dardanelles. The other powers would
not fail to give in their adhesion to the convention, which would be
open to them.
In this manner commercial navigation would be guaranteed
against the chances of war, and military armaments could neither
remain in nor pass through the Isthmus without the permission of
the Sovereign of the country.
The question of the importance to the commercial interests of
Great Britain of cutting through the Isthmus of Suez, has been
considered in the most favourable light by the principal men of
science, engineers, economists, and public writers of England. I shall
quote hereafter the opinions of Mr. Anderson, the present director of
the Peninsular and Oriental Company, and of Captain James Vetch,
R. E., from their respective works. (Appendix, Nos. 8 and 9.) The
fact of the question having been frequently treated with favour by
the press, seems to show that it has already been accepted by the
feeling of the country; the remarkable extract from the “Papers for
the People” in the memorial of the engineers (Appendix, No. 4) will
be read with interest. The celebrated novelist, Charles Dickens
himself, has not disdained to devote several eloquent pages to a
very practical consideration of the project for constructing a canal
through the Isthmus of Suez.
It is to be remarked that the English authors who have written
upon this question, have, without exception, advocated the direct
line from Suez to Pelusium. This view is taken by all the inhabitants
of Egypt, and I doubt if the indirect line, complicated as it is by
traversing the Nile, would have been adopted by two of my
compatriots so distinguished as M. Baude and M. Paulin Talabot, if
they had themselves been on the spot before they gave their
opinions.
The Moniteur Universel of France, in the Number for the 6th of
July, has proved the advantage of the direct track over the indirect

one. I refer my readers to that article (Appendix, No. 9).
It is incumbent on me to add, that, although the two tracks may
be entertained, theoretically speaking, practically only one is now to
be thought of; for the Viceroy of Egypt, who consents to the cutting
of the Isthmus, has a perfect right to refuse to allow the whole of
Egypt to be cut through. He has, in his written instructions, specially
charged me to make known his declaration, which is in the following
terms:—
“After having passed in review the numerous projects submitted to
various Governments or to the public for more than fifty years, I
grant perfect liberty for the application of those means that science
shall recognise to be best to bring the Red Sea and the
Mediterranean into communication at any point of the Isthmus,
eastward of the course of the Nile; but I declare that I will not
authorize the Grand Maritime Suez Canal Company to adopt any
track which shall have its point of departure on the Mediterranean
coast, to the west of the Damietta branch, and which shall traverse
the course of the Nile.”
If it were necessary, reference might be made to the East India
Company, the merchants of Australia, of Singapore, of Madras, of
Calcutta and of Bombay, the commercial houses of the City, the
shipowners of London and Liverpool, the manufacturers of
Manchester, the proprietors of iron mines, the manufacturers of
machines, the Peninsular and Oriental Steam Navigation Company,
the directors of banks and of extensive industrial undertakings, the
Chambers of Commerce, the proprietors of coal-fields, who in 1854
exported 1,309,251 tons of coal, of the value of £2,127,156, an
amount which, immense as it already is, will be still farther
increased, and to a considerable extent, by the opening of the
Isthmus of Suez.
I appeal to their interests, and leave the decision to their
judgment.

Lastly, the objection has been made, that the canal project would
not be received with favour by the Turkish Government; but, like
every question in which the principle is just, the consequences are
infallible; and from whatever point of view we regard this question
of the Isthmus of Suez, we see nothing but universal benefit arise
from it.
As I have already remarked, I met with no opposition at
Constantinople on the part of the Porte. Turkey is aware that the
Canal of the two Seas is destined to add to her power and
prosperity, by bringing Constantinople nearer by 4300 leagues to the
Indian Ocean, and by facilitating the communication with the Holy
Places of Arabia, the source of the authority the Sultan possesses
over his Mussulman population.
Turkey can rise from her present languor only by borrowing capital
and intelligence from Europe. The prosperity of the East is intimately
connected at the present day with the interests of civilization in
general, and the most effectual means of working its welfare, in
connection with that of humanity, is to break down the barriers that
still separate individuals, races, and nations.
War and commerce have civilized the world. War will have played
out its part with that last effort which is being made under our eyes.
The victories hereafter to be gained will be those of commerce only.
Let us exert ourselves to open up for her a new route. This object
may be pursued and attained—in the words of a great writer—“A
travers les orages et les ténèbres de la guerre.” (Guizot.)
Let us bring the populations of Polynesia, of Australia and China,
of the Indies and of Africa, nearer to Europe; let us make them
participators in the blessings of civilization.
To accomplish this great undertaking, we appeal to all religious
and intelligent men, for it is worthy of their sympathy and co-
operation.
We invoke the support of all statesmen, because in the
establishment of new and easy means of communication between

the two hemispheres all nations are interested. Lastly, we will
address ourselves to the capitalists, when they have satisfied
themselves of the pecuniary advantages to be derived from the
undertaking.
Ferd. de Lesseps.
London, July, 1855.

APPENDIX.
No. I.
MEMORIAL ADDRESSED TO HIS HIGHNESS
MOHAMMED SAID.
MEMORIAL ADDRESSED TO HIS HIGHNESS
MOHAMMED SAID, VICEROY OF EGYPT.
The Camp, Marea, In the Lybian Desert,
15th November, 1854.
The junction of the Mediterranean and the Red Seas, by a
navigable canal, is an undertaking the utility of which has attracted
the attention of all the great men who have reigned in, or
conquered, Egypt: Sesostris, Alexander the Great, Julius Cæsar, the
Arab Conqueror Amrou, Napoleon I. and Mehemet Ali.
A canal, communicating with the Nile, was in existence in ancient
times; first, for a period of 100 years, down to about the middle of
the ninth century before the Hegira; secondly, for a period of 445
years, from the reign of the first successors of Alexander the Great,
down to about the fourth century before the Hegira; thirdly and
lastly, for a period of 130 years after the Arabian conquest.
Napoleon, upon his arrival in Egypt, immediately organized a
commission of engineers to ascertain whether it would be possible to
re-establish that ancient channel of navigation: the question was
resolved in the affirmative, and when the learned M. Lepère
delivered to him the report of the commission, on the eve of his

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