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Solution Manual for Financial Reporting and Analysis 13th Edition by Gibson

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Solution Manual for Financial Reporting and Analysis 13th Edition by Gibson Solution Manual for Financial Reporting and Analysis 13th Edition by Gibson Solution Manual for Financial Reporting and Analysis 13th Edition by Gibson

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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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H CHAPTER IX ERE, all in a rush of twenty-four hours, was a glut of incident for a young woman out for adventure. Triona had only made his effect on the romantically feminine within Olivia by his triumphant rescue. As to that he need have no misgivings. So once did Andromeda see young Perseus, calm and assured, deliver her from the monster. Triona’s felling of Mavenna appealed to the lingering savage woman fiercely conscious of wrong avenged; but his immediate and careless mastery of the situation struck civilized chords. She could see him dominating the sheepskin-clad tribe in the Urals (see Through Blood and Snow) until he established their independence in their mountain fastness. She could see him, masterful, resourceful, escaping from the Bolshevik prison and making his resistless way across a hostile continent. She could also appreciate, after this wonder-day at Richmond, the suppleness of his simple charm which won him food and shelter where food scarcely existed and shelter to a stranger was a matter of shooting or a bashing in of heads. As for Mavenna, her flesh still shuddered at the memory of those few moments of insult. What he said she could scarcely remember. The inextricable clutch of his great arms around her body and the detestable kisses eclipsed mere words. Unwittingly his hug had compressed her throat so that she could not scream. There had been nothing for it but the slipper unhooked by the free arm, and the doughty heel. Had she won through alone to her room, she would have collapsed—so she assured herself—from sickening horror. But the Deliverer had been there, as in a legend of Greece or Broceliande, and had saved her from the madness of the nymph terror stricken by Satyrs. The two extravagances had, in a way, counteracted each other, setting her, by the morning, in a normal equilibrium. She had tried to explain the phenomenon by referring to her having spent the night in striking a moral balance-sheet. And
then had come the day, the wonderful day, in which the Deliverer had proved himself the perfect, gentle Knight. Can it be wondered that her brain swam with him? She went the next morning to Lydia’s hat shop, and, in the little room which Sydney Brooke had called her cubby hole, a nine-foot- square boudoir office, reeking with Lydia’s scent and with Heaven knows what scandals and vulgarities and vanities of post-war London, she poured out her tale of outrage. After listening with indulgent patience, Lydia remarked judicially: “I told you, my dear child, when you came to London, that the first lesson you had to learn was to take care of yourself.” Olivia flashed. She had taken care of herself well enough. But that brute Mavenna—what about him? “Everybody knows Mavenna,” replied Lydia. “No girl in her senses would have trusted herself alone with him.” “And, with that reputation, he’s a friend of yours and Sydney’s?” Lydia shrugged her plump shoulders. “Really, my dear, if one exacted certificates of lamb-like innocence, signed by a high celestial official, before you admitted anyone into the circle of your acquaintance, you might as well go and live on a desert island.” “But this man’s a beast and you’ve known it all along!” cried Olivia. “Only in one way.” “But—my God! Isn’t that enough?” Olivia stood, racked with disgust and amazement, over her mild-eyed, philosophic friend. “What would you have done if you had been in my place?” “I could never have been in your place,” said Lydia. “I should have been too wise.” “How?” “The knowledge of men, my dear, is the beginning of wisdom.” “And I ought to have known?”
“Of course. At any rate, you’ll know in the future.” “I shall. You may be dead certain I shall,” declared Olivia, in her anger and excitement seizing a puckered and pleated cushion from the divan by which she stood. “And if even I—−-” “Don’t, darling; you’ll tear it,” said Lydia calmly. Olivia heaved the cushion back impatiently. “What I want to know is this. Are you and Sydney going to remain friends with Mavenna?” “I’m afraid we’ll have to,” replied Lydia. “Mavenna and Sydney are in all sorts of big things together.” “Well, when next you see him, Lydia, look well into his face and ask him what he thinks of the heel of my slipper and Mr. Triona’s fist. He’s not only a beast. He’s a worm. When I think of him picking himself up, after being knocked down by a man half his size——” She laughed a bit hysterically. “Oh—the creature is outside the pale!” Lydia shook her fair head. “I’m sorry for you, my dear. But he’s inside all right.” “Then I’m not going to be inside with him!” cried Olivia. And, like a little dark dust storm, she swirled out of the office and, through the shop, into the freedom and spaciousness of the streets. And that, for Olivia, was the end of night clubs and dancing as a serious aim in life, and a host of other vanities. A few mornings afterwards Lydia sailed into the flat and greeted Olivia as though nothing had happened. She seemed to base her philosophy of life on obliteration of the past, yesterday being as dead as a winter’s day of sixty years ago. Would Olivia lunch with Sydney and herself at some riverside club? Sydney, having collected Mauregard, would be calling for them with the car. The day was fine and warm; the prospect of the cool lawn reaching down to the plashing river allured, and she liked Mauregard. Besides, she had begun to take a humorous view of Lydia. She consented. Lydia began to talk of her wedding, fixed for the middle of July, of the clothes that she had and the clothes that she hadn’t—the ratio of the
former to the latter being that of a loin-cloth to the stock of Selfridge’s. When she was serious minded, Lydia always expressed herself in terms of raiment. “And you’ll have to get some things, too, as you’re going to be bridesmaid.” “Am I?” asked Olivia, this being the first she had heard of it. “And who’s going to be best man—Mavenna?” Lydia looked aghast. So might a band of primitive Christians have received a suggestion of inviting the ghost of Pontius Pilate to a commemorative supper. “My dear child, you don’t suppose we’re going to ask that horror to the wedding?” “The other day,” Olivia remarked drily, “I understood that you and Sydney loved him dearly.” Lydia sighed. “I’m beginning to believe that you’ll never understand anything.” So the breach, if breach there were, was healed. Olivia, relating the matter to Triona at their next meeting, qualified Lydia’s attitude as one of callous magnanimity. Meanwhile her intimacy with the young man began to ripen. One evening Janet Philimore invited her to dine at the Russian circle of a great womans’ club, which was entertaining Triona at dinner. This was the first time she had seen him in his character of modest lion; the first time, too, she had been in a company of women groping, however clumsily, after ideals in unsyncopated time. The thin girl next to her, pretty enough, thought Olivia, if only she had used a powder puff to mitigate the over-assertiveness of a greasy skin, and had given less the impression of having let out her hair to a bird for nesting purposes, and had only seized the vital importance of colour—the untrue greeny daffodil of her frock not being the best for a sallow complexion—the girl next to her, Agnes Blenkiron, started a hectic conversation by enquiring what she was going to do in Baby Week. The more ignorant Olivia professed herself to be of babies and their antecedents, especially the latter,
the more indignantly explicit became Miss Blenkiron. Olivia listened until she had creepy sensations around the roots of her hair and put up an instinctive hand to assure herself that it was not standing on end. Miss Blenkiron talked feminist physiology, psychology, sociological therapeutics, until Olivia’s brain reeled. Over and over again she tried to turn to her hostess, who fortunately had a pleasant male and middle-aged neighbour, but the fair lady, without mercy, had her in thrall. She learned that all the two or three thousand members of the club were instinct with these theories and their aims. She struggled to free herself from the spell. “I thought we were here to talk about Russia,” she ventured. “But we are talking about Russia.” Miss Blenkiron shed on her the lambency of her pale blue eyes. “The future of the human race lies in the hands of the millions of Russian babies lying in the bodies of millions of Russian women just waiting to be born.” A flash of the devil saved Olivia from madness. “That’s a gigantic conception,” she said. “It is,” Miss Blenkiron agreed, unhumorously, and continued her work of propaganda, so that by the time the speeches began Olivia found herself committed to the strenuous toil of a lifetime as a member of she knew not what societies. The only clear memory she retained was that of a tea engagement some Sunday in a North London garden city where Miss Blenkiron and her brother frugally entertained the advanced thinkers of the day. In spite of the sense of release from something vampiric, when the speeches hushed general conversation, she recognized that the strange talk had been revealing and stimulating, and she brought a quickened intelligence to the comprehension of the gathering. To all these women the present state of the upheaved world was of vast significance. In Lydia’s galley no one cared a pin about it, save Sydney Rooke, who cursed it for its interference with his income. But here, as was clearly conveyed in the opening remarks of the chairwoman, a novelist of distinction, every one was intellectually concerned with its infinite complexity of aspect. To them, the guest
of the evening, emerging as he had done from the dizzying profundities of the whirlpool, was a figure of uncanny interest. “It’s the first-hand knowledge of men like him that is vital,” Miss Blenkiron whispered when the chairwoman sat down. “I should so much like to meet him.” “Would you?” said Olivia. “That’s easily managed. He’s a great friend of mine.” And she was subridently conscious of having acquired vast and sudden merit in her neighbour’s eyes. Triona pleased her beyond expectation. The function, so ordinary to public-dinner-going London, was new to her. She magnified the strain that commonplace, even though sincere, adulation could put upon a guest of honour. She felt a twinge of apprehension when he stood up, in his loose boyish way, and brushing his brown hair from his temples, began to speak. But in a moment or two all such feelings vanished. He spoke to this assembly of a hundred, mostly women, much as, in moments of enthusiasm, he would speak to her. And, indeed, often catching her eye, he did speak to her, subtly and flatteringly bringing her to his side. Her heart beat a bit faster when, glancing around and seeing every one hanging on his words, she realized that she alone, of all this little multitude, held a golden key to the mystery of the real man. There he talked, with the familiar sway of the shoulders, and, when seeking for a phrase, with the nervous plucking of his lips; talked in his nervous, picturesque fashion, now and then with a touch of the poet, consistently modest, only alluding to personal experience to illustrate a point or to give verisimilitude to a jest. He developed his feminist theme logically, dramatically, proving beyond argument that the future of civilization lay in the hands of the women of the civilized world. He had a great success. Woman, although she knows it perfectly well, loves to be told what she wants and the way to get it: she will never follow the way, of course, having a tortuous, thorny, and enticing way of her own; but that doesn’t matter. The principle, the end, that is the thing: it justifies any amazing means. He sat down
amid enthusiastic applause. Flushed, he sought Olivia’s distant gaze and smiled. Then she felt, thrillingly, that he had been speaking for her, for her alone, and her eyes brightened and flashed him a proud message. She met him a while later in the thronged drawing-room of the club, rather a shy and embarrassed young man, heading a distinct course toward her through a swarm of kind yet predatory ladies. She admired the simple craftsmanship of his approach. “How are you going to get home?” he asked. The adorable carelessness of twenty shrugged its shoulders. “I don’t know. The Lord will provide.” “If you can’t find a taxi, will you walk?” The question implied a hope, so obvious that she laughed gaily. “There are buses also and tubes.” “In which you can’t travel alone at this time of night.” She scoffed: “Oh, can’t I?” But his manifest fear that she should encounter satyrs in train or omnibus pleased her greatly. “Father’s dining at his club close by and is calling for me. He will see that you get home safely,” said Janet Philimore. “It’s miles out of your way, dear,” said Olivia. “I’ll put myself in the hands of Mr. Triona.” So, taxis being unfindable, they walked together through the warm London night to Victoria Street. It was then that he spoke of his work, the novel just completed. Of all opinions on earth, hers was the one he most valued. If only he could read it to her and have the priceless benefit of her judgment. Secretly flattered, she modestly depreciated, however, her critical powers. He persisted, attributing to her unsuspected qualities of artistic perception. At last, not reluctantly, she yielded. He could begin the next evening. The reading took some days. Olivia, new to creative work, marvelled exceedingly at the magic of the artist’s invention. The personages of the drama, imaginary he said, lived as real beings. She regarded their creation as uncanny.
“But how do you know she felt like that?” He shrugged his shoulders and smiled. “I can’t conceive her feeling otherwise.” Yet, for all her wonder, she brought her swift intelligence to the task of criticism. Not since her mother’s illness had she taken anything so seriously. She lived in the book, walking meanwhile through an unreal world. Her golden words, on the other hand, the young man captured eagerly and set down in the margin of the manuscript. Half-way through the reading, they were on terms of Christian names. Minds so absorbed in an artistic pursuit grew impatient of absurd formalities of address. They slipped almost imperceptibly into the Olivia and Alexis habit. At the end they pulled themselves up rather sharply, with blank looks at an immediate future bereft of common interest. “I’ll have to begin another, right away, so that you can be with me from the very start,” he said. “Have you an idea?” “Not yet.” “When will you have one?” He didn’t know. What man spent with the creative effort of a novel has the vitality to beget another right away? He feels that the very last drop of all that he has known and suffered and enjoyed has been used to the making of the book. For the making of another nothing is left. “I suppose I’ll have to lie fallow for a week or so,” said the young optimist. “And as soon as things begin to sprout you’ll let me know?” asked Olivia, forgetful that before harvest there must be seed time. He promised; went home and cudgelled tired brains; also cudgelled, for different reasons, an untired and restless soul. Let him make good, not ephemerally as the picturesque narrator of personal adventure, but definitely, with this novel as the creative artist—the fervent passion of his life—and he would establish himself
in her eyes, in her mind, in her heart; so that treading solid ground, he could say to her: “This is what I am, and for what I am, take me. All that has gone before was but a crude foundation. I had to take such rubbish and rubble as I could find to hand.” But until then, let him regard her as a divinity beyond his reach, rendering her service and worship, but forbearing to soil her white robe with a touch as yet unhallowed. Many a time, they could have read no more that day. Just one swift movement, glance or cry on the part of the man, and the pulses of youth would have throbbed wildly together. He knew it. The knowledge was at once his Heaven and his Hell. A less sensitive human being would not have appreciated the quivering and vital equipoise. Many a time he parted from her with the farewell of comradely intimacy on his lips, and when the lift had deposited him on the street level his heart had been like lead and his legs as water, so that he stumbled out into the lamp-lit dark of night like a paralytic or a drunken man. And that which was good in him warred fiercely against temptations more sordid. As far as he knew, she was a woman of fortune. So did her dress, her habit of life, her old comfort-filled Medlow home, proclaim her. Of her social standing as the daughter of Stephen Gale who bawled out bids for yelts and rams in the Medlow market place, he knew or understood very little. Her fortune was a fact. His own, the few hundreds which he had gained by Through Blood and Snow, was rapidly disappearing. The failure of the new book meant starvation or reversion to Cherbury Mews. Married to a woman with money he could snap his fingers at crust or livery. . . . For the time he conquered. The end of the reading coincided more or less with Midsummer quarter-day. Bills from every kind of coverer or adorner of the feminine human frame fell upon her like a shower of autumn leaves. She sat at her small writing desk, jotted down the amounts, and added them up with a much sucked pencil point. The total was incredible. With fear at her heart she rushed round to her bank for a note of her balance. It had woefully decreased since January.
Payment of all these bills would deplete it still more woefully. The rent of “The Towers” and the diminishing income on the deposit account were trivial items set against her expenditure. She summoned Myra. “We’re heading for bankruptcy.” “Any fool could see that,” said Myra. “What are we going to do?” “Live like Christians instead of heathens,” replied Myra. “If you would come to Chapel with me one Sunday night you could be taught how.” Here Myra failed. She belonged to a Primitive Non-Conformist Communion whose austere creed and drab ceremonial had furnished occasion for Olivia’s teasing wit since childhood. Heathendom, ever divorced from Lydian pleasures, presented infinitely more reasons for existence than Myra’s Calvinism. “It seems funny that a dear old thing like you can revel in the idea of Eternal Punishment.” “I haven’t got much else to revel in, have I?” said Myra grimly. “I suppose that’s true,” said Olivia thoughtfully. “But it isn’t my fault, is it? If you had wanted to revel, mother and I would have been the last people to prevent you. Why not begin now? Go and have a debauch at the pictures.” “You began by talking of bankruptcy,” said Myra. “And you prescribed little Bethel. I’d sooner go broke.” “You’ll have your own way, as usual,” said Myra. “And if I go broke, what’ll you do?” asked Olivia, unregenerately enjoying the conversation. “I suppose I’ll have to put you together again,” replied Myra, with no sign of emotion on her angular, withered face. Olivia leaped from her chair. “I’m a beast.”
“That can’t be,” said Myra, “seeing that it was I as brought you up.” That was the end of the argument. Olivia recognized in Myra every useful quality save that of the financier. She dismissed Myra from her counsels. But the state of her budget cost her a sleepless night or two. At the present rate of expenditure a couple of years would see her penniless. For the first time since her emancipation from Medlow fetters she had the feeling of signing her own death- warrant on every cheque. Heroic resolves were born of these days of depression. As a climax to her worries, came Bobby Quinton, one afternoon. What had he done to offend his dearest of ladies? Why had she stopped the dancing lessons? Why did Percy’s see her no more? “I’m fed up with Percy’s and the whole gang,” said Olivia. “Not including me, surely?” cried the young man, with a dog’s appeal in his melting brown eyes. She was kind. At first, she had not the heart to pack him off to the froth and scum of social life to which he belonged. He had the charm of unsuccessful youth so pathetic in woman’s eyes. “If you are,” said he, “I’m done for. I’ve no one to look to but you, in the wide world.” Here was responsibility for the safety of a human soul. Olivia gave him sound advice, repeating many an old argument and feeling enjoyably maternal. But when Bobby grew hysterical, and, with mutation of sex, quoted the Indian Love Lyrics and professed himself prepared to die beneath her chariot wheels, and threatened to do so if she disregarded his burning passion, she admonished him after the manner of twentieth-century maidenhood. “My good Bobby, don’t be an ass.” But Bobby persisted in being an ass, with the zeal of the dement. He became the fervent lover of the cinquecento Bandello—and, with his dark eyes and hair, looked the part. Imploring he knelt at the feet of the divinity.
“That’s all very well, my dear boy,” said Olivia, unmoved by his rhapsody, “all very nice and all very beautiful. But what do you want me to do?” Of course he wanted her to marry him, there and then: to raise him from the Hell he was in to the Heaven where she had her pure habitation. With her he could do great things. He guaranteed splendid achievements. “Before a woman marries a man,” said Olivia, “she rather wants an achievement or two on account.” “Then you don’t love me, you don’t trust me?” exclaimed the infatuated young man, ruffling his sleek black hair. “I can’t say that I do,” replied Olivia, growing weary. “If you tell me what sort of fascination you possess, I’ll give it due consideration.” “Then I may as well go away and blow my brains out,” he cried tragically. “You might better go and use such brains as you have in doing a man’s work,” retorted Olivia. He reproached her mournfully. “How unkind you are.” “If you came here as a window-cleaner or a lift porter I might be kinder. You’re quite a nice boy,” she went on after a pause, “otherwise I shouldn’t have anything to do with you. But you haven’t begun to learn the elements of life. You’re utterly devoid of the sense of duty or responsibility. Like the criminal, you know. Oh, don’t get angry. I’m talking to you for your good. Pretending to teach idle women worthless dancing isn’t a career for a man. It’s contemptible. Every man—especially nowadays—ought to pull his weight in the world. The war’s not over. The real war is only just beginning. Instead of pulling your weight you think it’s your right to sit on a cushion, a passenger—or a Pekie dog—and let other people pull you.” “You don’t understand——”
“Oh, yes I do. One has to live, and at first we take any old means to hand. But you’ve been going on at this for a couple of years and haven’t tried to get out of it. You like it, Bobby——” “I loathe it.” “You don’t,” she went on remorselessly, with her newly acquired knowledge of what a man’s life could be. “All you loathe is the work —especially when it doesn’t bring you in as much money as you want. You hate work.” Resentment gradually growing out of amusement at his presumptuous proposal had wrought her to a pitch of virtuous indignation. Here was this young man, of cultivated manners, intelligent, able-bodied, attractive, rejecting any kind of mission in existence, and—— “Look here, Bobby,” she said, rising from her chair by the tea- table and dominating him with a little gesture, “don’t get up. You sit there. You’ve asked me to marry you, because you think I’m rich. Hold your tongue,” she flashed, as he was about to speak. “I’ll take all the love and that sort of thing for granted. But if I was poor you wouldn’t have thought of it. At the back of your mind you imagine that if I married you, we could lead a life of Percy’s and the Savoy and Monte Carlo and the South Sea Islands, and you needn’t do another stroke of work all your life long.” He leaned forward in his chair protesting eagerly that it wasn’t true. He would marry her to-morrow were she penniless. She had his salvation soul and body in her hands. He hungered for work; but the coils of his present life had a strangle-hold on him. Suddenly he rose and advanced a step towards her. “Listen, Olivia. If you won’t marry me, will you help me in other ways? I’m desperate. You think you know something about the world. But you don’t. I’m up against it. It may mean prison. For the love of God lend me a couple of hundred pounds.” The ugly word prison sent a stab through her heart; but immediately afterwards the common-sense of her Gale ancestry told
her either that he was lying, or, if it were true, that he deserved it. She asked coldly: “What have you been doing?” “I can’t tell you,” he said. “You must trust me.” “But I don’t and that is why I can’t lend you two hundred pounds.” “You refuse?” His soft voice became a snarl and his lip curled unpleasantly back beneath the little silky moustache. “Of course I do.” “I don’t know how you dare, after all the encouragement you’ve given me.” She stared at him aghast. “Encouragement?” “Yes. Didn’t you make me dance attendance on you at Brighton? Haven’t you brought me here over and over again? You’ve behaved damnably to me. You’ve made me waste my time. I’ve turned other women who would have only been too glad——” In horror, she flew to the door and threw it open. “Go,” she said. And speeding across the hall she threw open the flat door. “Go,” she said again. She crossed the landing and rang the lift bell and returned to the hall, where he met her and threw himself on his knees and looked up at her with wild, hunted eyes. “Forgive me, Olivia. For God’s sake forgive me. I was mad. I didn’t know what I was saying. Shut that door and I’ll tell you everything.” But Olivia passed him by into the sitting-room, and stood with her back against the door until she heard the clash of the lift gates and the retreating footsteps of Bobby Quinton. A short while ago she had nearly quarrelled with Mauregard because, in a wordy dissertation on the modern young men who
lived on women, he instanced Bobby as possibly coming within the category. Now she knew that Mauregard was right. She felt sick. Also deadly ashamed of her superior attitude of well-meant reprimand. She burned with the consciousness of tongue in cheek while he listened. Well, that was the end of the Lydian galley. She did not recover till the next afternoon, when Triona called to take her to the Blenkirons’ Sunday intellectual symposium in Fielder’s Park. She welcomed him impulsively with both hands outstretched, as a justification of her faith in mankind. “You can’t tell how glad I am to see you.” “And you,” said he, kissing first one hand and then the other, “can’t tell how good I think God is to me.”
H CHAPTER X E brought great news. Not only had his publishers thought well of the novel and offered him good terms, including a substantial advance, but they professed themselves able to place it serially in England for a goodly sum. They had also shown him the figures of the half-yearly returns on American sales of Through Blood and Snow which transcended his dreams of opulence. “I had forgotten America,” he said naïvely. “You’re nothing, if not original,” she laughed. “That’s what I like about you.” He insisted on the wild extravagance of a taxi to the garden city. All that money he declared had gone to his head. He felt the glorious intoxication of wealth. When they were about to turn off the safe highway into devious garden-city paths, he said: “Let us change our minds and go straight on to John o’ Groats.” “All right. Let us. We’re on the right road.” He swerved towards her. “Would you? Really?” She opened her bag and took out her purse. “I’ve got fifteen and sevenpence. How much have you?” “About three pounds ten.” She sighed. “This unromantic taxi man would charge us at least five pounds to take us there.” “We can turn back and fill our pockets at the bank.” “It’s Sunday.” “I never before realized the blight of the British Sabbath.” “So we’re condemned to Fielder’s Park.” “But one of these days we’ll go, you and I together, to John o’ Groats—as far as we can and then——”
“And then?” “And then we’ll take a ship and sail and sail until we come to the Fortunate Isles.” “You’ll let Myra come too?” said Olivia, deliciously anxious to keep to the playful side of an inevitable road. “Of course. We’ll find her a husband. The cabin-boy. Pour mousse un chérubin.” “And when we get to the Fortunate Isles, what should we do there?” “We shall fill our souls with sunlight, so that we could use it when we came back to our work in this dark and threatening modern world.” The girl’s heart leapt at the reply. “I’ll go up to John o’ Groats with you whenever you like,” she said. But the taxi, at that moment drawing up before the detached toy villa, whose “Everdene” painted on the green garden gate proclaimed the home of the Blenkirons, inhibited Triona’s reply. They found within an unbeautiful assemblage of humans inextricably mingled with crumbling cake and sloppy cups of tea and cigarette smoke. Agnes, shining with heat and hospitality, gave them effusive welcome and, extricating her brother from a distant welter, introduced him to the newcomers. He was a flabby-faced young man with a back-thatch of short rufous hair surmounting a bald forehead. By his ears grew little patches of side whiskers. He wore an old unbuttoned Norfolk jacket and a red tie in a soft collar without an under pin. He greeted them with an enveloping clammy hand. “So good of you to come, Miss Gale. So glad to meet you, Mr. Triona. We have heard so much about you. You will find us here all very earnest in our endeavour to find a Solution—for never has human problem been so intricate that a Solution has not been discovered.” “What’s the problem?” asked Olivia.
“Why, my dear lady, there’s only one. The Way Out—or, if you have faith—The Way In.” He caught a lean, thin-bearded man by the arm. “Dawkins, let me introduce you to Miss Gale. Mr. Dawkins is our rapporteur.” “You haven’t any tea,” said Dawkins rebukingly, as though bidden to a marriage feast she had no wedding garment. “Come with me.” He frayed her a passage through the chattering swarm that over- filled the little bow-windowed sitting-room and provided her with what seemed to be the tepid symbols of the brotherhood. “What did you think of Roger’s article in this week’s Signal?” “Who is Roger, and what is The Signal?” Olivia asked simply. Dawkins stared at her for a second and then, deliberately turning, wormed his path away. Olivia’s gasp of surprise was followed by a gurgle of laughter which shook her lifted cup so that it spilled. The sight of a stained skirt drew from her a sharp exclamation of dismay. Agnes Blenkiron disengaging herself from the cluster round the tea-table came to the rescue. What was the matter? Olivia explained. “Oh, my dear,” said Agnes, “I ought to have told you. It’s my fault. Dawkins is such a touchy old thing. Roger, of course, is my brother—didn’t you know? And The Signal is our weekly. Dawkins is the editor.” “I’m awfully sorry,” said Olivia, “but ought I to read The Signal?” “Why, of course,” replied Agnes Blenkiron intensely. “Everybody ought to read it. It’s the only periodical that matters in London.” Olivia felt the remorse of those convicted of an unpardonable crime. “I’ll get a copy to-morrow at the bookstall at Victoria Station.” Agnes smiled in her haggard way. “My dear, an organ like The Signal doesn’t lie on the bookstalls, like Comic Cuts or The Fortnightly Review. It’s posted to private subscribers, or it’s given away at meetings.”
“Who pays for the printing of it?” asked the practical Olivia, who had learned from Triona something of the wild leap in cost of printed matter. “Aubrey Dawkins finds the money. He gets it in the City. He has given up his heart and soul to The Signal.” “I’ve made an enemy for life,” said Olivia penitently. Miss Blenkiron reassured her. “Oh, no you haven’t. We haven’t time for enemy making here. Our business is too important.” Olivia in a maze asked: “What is your business?” “Why, my dear child, the Social Revolution. Didn’t you know?” “Not a bit,” said Olivia. She learned many astonishing things that afternoon, as she was swayed about from introduction to introduction among the eagerly disputing groups. Hitherto she had thought, with little comprehension, of the world-spread social unrest. Strikes angered her because they interfered with necessary reconstruction and only set the working classes in a vicious circle chasing high wages and being chased in their turn by high prices. At other demands she shuddered, dimly dreading the advent of Bolshevism. And there she left it. She had imagined that revolutionary doctrines were preached to factory hands either secretly by rat-faced agents, or by brass- throated, bull-necked demagogues. That they should be accepted as a common faith by a crowd of people much resembling a fairly well- to-do suburban church congregation stirred her surprise and even dismay. “I don’t see how intelligent folk can hold such views,” she said to Roger Blenkiron, who had been defending the Russian Soviet system as a philosophic experiment in government. He smiled indulgently. “Doesn’t the fault lie rather in you, dear lady, than in the intelligent folk?” “Would that argument stand,” she replied, “if you had been maintaining that the earth was flat and stood still in space?”
“No. The roundness and motion of the earth are ascertained physical facts. But—I speak with the greatest deference—can you assert it to be a scientific fact that a community of human beings are a priori incapable of managing their own affairs on a basis of social equality?” “Of course I can,” Olivia declared, to the gentle amusement of standers-by. “Human nature won’t allow it. With inequalities of brain and character social equality is impossible.” “Dear Lady”—she hated the apostrophe as he said it and the lift of the eyebrows which caused an upward ripple that was lost in the far reaches of his bald forehead. “Dear Lady,” said he, “in the Royal Enclosure at Ascot you can find every grade of human intellect, from the inbred young aristocrat who is that much removed”—he flicked a finger nail—“from a congenital idiot to the acute-brained statesman; every grade of human character from the lowest of moral defectives to the highest that the present civilization can produce. And yet they are all on a social equality. And why? They started life on a common plane. The same phenomenon exists in a mass-meeting of working- men—in any assemblage of human beings of a particular class who have started life on a common plane. Now, don’t you see, that if we abolished all these series of planes and established only one plane, social equality would be inevitable?” “I don’t see how you’re going to do it.” “Ah! That’s another question. Think of what the task is. To make a clean sweep of false principles to which mankind has subscribed for—what do I know—say—eight thousand years. It can’t be done in a day. Not even in a generation. If you wish to render a pestilence- stricken area habitable, you must destroy and burn for miles around before you can rebuild. Extend the area to a country—to the surface of the civilized globe. That’s the philosophic theory of what is vulgarly called Bolshevism. Let us lay waste the whole plague- stricken fabric of our civilization, so that the world may arise, a new Phœnix, under our children’s hands.”
“You have put the matter to Miss Gale with your usual cogency, my dear Roger,” said Dawkins, who had joined the group. “Perhaps now she may take a less flippant view of our activities.” He smiled, evidently meaning to include the neophyte in the sphere of his kind indulgence. But Olivia flushed at the rudeness of his words. Triona who, hidden from Olivia by the standing group, had been stuffed into a sedentary and penitential corner with two assertive women and an earnest young Marxian gasfitter, and had, nevertheless, kept an alert ear on the neighbouring conversation, suddenly appeared once more to her rescue. “Pardon me, sir,” said he, “but to one who has gone through, as I have done, the Bolshevist horrors which you advocate so complacently, it’s your view that hardly seems serious.” “Atrocities, my dear friend,” said the seer-like Dawkins, “are proverbially exaggerated.” “There’s a fellow like you mentioned in the Bible,” retorted Triona. “I have always admired Didymus for his scientific mind,” said Dawkins. Triona pulled up his trouser leg and exposed his ankle. “That’s the mark of fetters. There was a chain and a twelve pound shot at the end of it.” “Doubtless you displeased the authorities,” said Dawkins blandly. “Oh, I’ve read your book, Mr. Triona. But before judging I should like to hear the other side.” “I’m afraid, Mr. Blenkiron,” said Triona, growing white about the nostrils, to his host who stood by in a detached sort of manner, with his hands on his hips, “I’ve unconsciously abused your hospitality.” Blenkiron protested cheerfully. “Not a bit, my dear fellow. We pride ourselves on our broad mindedness. If you preached reactionary Anglicanism here you would be listened to with respect and interest. On the other hand, we expect the same consideration to be shown to the apostles—if you will pardon the word—of our
advanced thought. Your experiences were, beyond doubt, very terrible. But we admit the necessity of a reign of terror. We shall have it in this country within the next ten years. Possibly—probably —all of us here and all the little gods we cling to will be swept away like the late Russian aristocracy and intelligentsia. But suppose we are all—Dawkins, my sister, and myself—prepared to suffer martyrdom for the sake of humanity, what would you have to say against us? Nay—you can be quite frank. Words cannot hurt us.” “I should say you ought to be tied up in Bedlam,” said Triona. “Do you agree with that, Miss Gale?” said Roger Blenkiron, turning on her suddenly. She reflected for a moment. Then she replied: “If you can prove beyond question that in fifty years’ time you will create a more beautiful world, there’s something in your theories. If you can’t, you all ought to be shot.” He laughed and held out his hand. “That’s straight from the shoulder. That’s what we like to hear. Shake hands on it.” He drew a little book from his pocket and scribbled a memorandum. “You’re on the free-list of The Signal. I think Agnes has your address. You’ll find in it overwhelming proof. Perhaps, Mr. Triona, too, would like——” But Triona shook his head. “As a technical alien perhaps it would be inadvisable for me to be in receipt of revolutionary literature.” “I quite understand,” smiled Blenkiron, returning the book to his pocket. Dawkins melted away. Other guests took leave of their host. Triona and Olivia, making a suffocating course towards the door, were checked by Agnes Blenkiron who was eager to introduce them to Tom Pyefinch who, during the war had suffered, at the hands of a capitalist government, the tortures of the hero too brave to fight. “Oh, no, no,” cried Olivia horrified. Agnes did not hear. But Pyefinch, a pallid young man with a scrubby black moustache, was too greatly occupied with his immediate circle to catch his hostess’s eye. From his profane lips Olivia learned that patriotism was the most blatant of superstitions:
that the attitude of the fly preening itself over its cesspool was that of the depraved and mindless being who could take pride in being an Englishman. He was not peculiarly hard on England. All other countries were the mere sewerages of the nationalities that inhabited them. The high ideals supposed to crystallize a nation’s life were but factitious and illusory, propagated by poets and other decadents in the pay of capitalists: in reality, patriotism only meant the common cause of the peoples floundering each in its separate sewer. . . . Mere rats, he declared, changing his metaphor. That was why he and every other intelligent man in the country refused to join in the rat fight which was the late war. Olivia clutched Triona’s arm. “For God’s sake, Alexis, let us get out of this. It makes me sick.” They drew deep breaths when they escaped into the fresh air. To Olivia, the little overcrowded drawing-room, deafening with loud voices, sour with the smell of milky tea and Virginian tobacco, reeking almost physically with the madness of anarchy, seemed a miniature of the bottomless pit. The irony of the man’s talk—the need to purify by flame a plague-stricken area! God once destroyed Sodom and Gomorrah. Why did He not blast with fire from heaven this House of Pestilence? Alexis Triona laughed sympathetically at her outburst. “I confess they’re rather trying,” he remarked. “Whenever you hear English people say they belong to the intelligentsia, you may be sure they’re frightened at common sense as not being intellectual enough. Blenkiron and Dawkins are fools of the first water; but Pyefinch is dangerous. I am afraid I lost my temper,” he added after a few steps. “You were splendid,” said Olivia. More than ever did he seem the one clear-brained, purposeful man of her acquaintance in the confused London world. Rapidly she passed them in review as she walked. Of the others Mauregard was the best; but he was spending his life on fribbles, his highest heaven
being a smile on the lips of a depraved dancing-woman. Then, Sydney Rooke, Mavenna, and, even worse now than Mavenna, the unspeakable Bobby Quinton. So much for the Lydian set of professed materialists and pleasure-seekers. In accepting Agnes Blenkiron’s invitation she had pleasurable anticipation of entering a sphere of earnest thinkers and social workers who might guide her stumbling footsteps into the path of duty to herself and her kind. And to her dismay she had met Dawkins and Blenkiron and Pyefinch, earnest, indeed, in their sophistry and mad in their theories of destruction. Her brain was in a whirl with the doctrines to which she had listened. She felt terrified at she knew not what. Even Lydia’s cynical world was better than this. Yet between these two extremes there must be a world of high endeavour, of science, art, philanthropy, thought; that in which, she vaguely imagined, Blaise Olifant must have his being; even that of the women at the club dinner. But her mind shook off women as alien to its subconscious argument. In this conjectural London world one man alone stood out typical—the man striding loosely by her side. A young careless angel, he had delivered her from Mavenna. A man, he had exorcised her horror of Bobby Quinton. And now, once more, she saw him, in her girlish fancy, a heroic figure, sane, calm, and scornful, facing a horde of madmen. They walked, occasionally losing their way and being put on it by chance encounters, through the maze of new and distressingly decorous avenues, some finished, others petering out, after a few houses, into placarded building lots or waste land; a wilderness not of the smug villa-dom of old-established suburbs, but of a queer bungalow-dom assertive, in its distinctive architecture, of unreal pursuit of Aspirations in capital letters. Most of the avenues abutted on a main street of shops with pseudo-artistic frontages giving the impression that the inhabitants of the City could only be induced to satisfy the vulgar needs of their bodies by the lure of the æsthetic. “Don’t let us judge our late friends too harshly,” said Triona waving an arm. “All this is the Land of Self-Consciousness.” At last they made their way through the solider, stolider fringes of the main road, and emerged on the great thoroughfare itself, wide
and unbusied on this late summer Sunday afternoon. Prosaically they lingered, waiting for an infrequent omnibus. “Thank goodness, we’re out of the Land of Self-Consciousness,” said Olivia. “The Great North Road is too big a thing.” Their eyes met in a smile. “I don’t forget your love of big things,” said he. “It’s inspiring. Yes. It’s a big thing. And it doesn’t really begin in London. It starts from Land’s End—and it goes on and on through the heart of England and through the heart of Scotland carrying two nations’ history on its flanks, caring for nothing but its appointed task, until it sighs at John o’ Groats and says: ‘My duty’s done.’ There’s nothing that stirs one’s imagination more than a great road or a great river. Somehow I prefer the road.” “You’re nearer to it because it was made by man.” “How our minds work together!” he cried admiringly “I only have to say half a thing and you complete it. More than that—you give my meaningless ideas meaning. Yes. God’s works are great. But we can’t measure them. We have no scale for God, But we have for Man, and so Man’s big works thrill us and compel us.” “What big thing could we do?” asked Olivia. “Do you mean humanity—or you and I together?” “Two human beings thinking alike, and free and honest.” Instinctively she took his arm and her step danced in time with his. “Oh, you don’t know how good it is to feel real. Let us do something big in the world. What can we do?” “You can help me to the very biggest thing in all the universe— for me,” he cried, pressing her arm tight against him. Her pulses throbbed. She knew that further argument on her part would be but exquisite playing with words. The hour which, in her maidenly uncertainty she had dreaded, had now come, and all fear had passed away. Yes; now she was real; now she was certain that her love was real. Real man, real woman. Her heart leaped to him with almost the shock of physical pain. Again in a flash she swept
the Lydian and the Blenkiron firmament and exulted. Yet in her happiness she said with very foolish and with very feminine guile: “Ah, my dear Alexis, that’s what I’ve longed for. If only I could be of some little help to you!” “Help?” He laughed shortly and halted and swung her round. “Have you ever tried to think what you are to me? Would you like me to tell you?” She disengaged herself and walked delicately on. “It may pass the time till the bus comes,” she said. He began to tell her. And three minutes afterwards the noisy, infrequent motor-bus passed them by, unheeded and even unperceived.
S CHAPTER XI OMEWHERE on the South Coast, screened from the vulgar by the trap of a huge watering-place, is a long, thin, sandy promontory sticking out to sea, like an innocent rib of wilderness. Here there is no fun of the fair, because there is no fair to provide the fun. There are no taverns, no boarding-houses, no lodgings. One exclusive little hotel rules the extreme tip of the tongue of land in consort with the miniature jetty and quay by which, in late exciting times, strange craft were moored, flying the white ensign and hoar with North Sea brine and deadly secrets. The rest of the spit is peppered with a score of little shy houses, each trying to hide itself from its neighbours, in the privacy of its own sandpit. If your house is on the more desirable side of it, you can look out over the vastness of the sea with the exhilarating certainty (if your temperament may thereby be exhilarated) that there is nothing but blue water between you and the coast of Africa. If your house is, less fortunately, on the other side, your view commands a spacious isle-studded harbour fringed by distant blue and mysterious hills. But it is given to any one to walk out of the back of his little hermitage, and, standing in the dividing road, to enjoy, in half a minute, both aspects at once. It is called esoterically by its frequenters “the Point,” so that the profane, map-searching, may not discover its whereabouts. Just high enough to be under the lee of a sand-hill, with its front windows and veranda staring at the African coast, some thousand miles away, stood the tiniest, most fragile and most absurd of the habitations. Its name was “Quien Sabe,” suggestive of an imaginative abandonment of search after nomenclature by the original proprietor. “A house called ‘Quien Sabe’——” said Alexis. “Is the house for us,” cried Olivia, aglow.
They took it at once, without question. It wasn’t as if it were an uncertain sort of place, like “Normanhurst,” or “Sea View.” The name proclaimed frankly the certainty of venturesomeness. And Alexis Triona, sitting on the scrubby grass and sand, his back against the little veranda, the infinite sea and all the universe enveloped in still moonlight, laughed the laugh of deep happiness at their childish inspiration. He rolled, licked and lit the final cigarette. Tobacco was good. Better was this August night of velvet and diamonds. Below, the little stone groin shone like onyx. The lazy surf of ebb-tide far away on the sand of a tiny bay glimmered like the foam in fairyland. Only half the man’s consciousness allowed itself to be drenched with the beauty of the night. The other half remained alert to a voice, to a summons, to something more rare and exquisite than the silver air and murmuring sea and the shine of all the stars. A few minutes before, languorous by his side, she had been part and parcel of it all. The retreating ripple of wave had melted into the softness of her voice. Her laughing eyes had gleamed importance in the stellar system. The sweet throb of her body, as she had reclined, his arm about her, was rhythmic with the pulsation of the night. And now she had gone; gone just for a few moments; gone just for a few moments until she would divinely break the silence by the little staccato cry of his name; but, nevertheless, her transitory severance had robbed this outer world of half its beauty. He had consciously to incorporate her in order to give meaning to this wonder of amethyst and aquamarine and onyx and diamond and pearl and velvet and the infinite message of the immensities coming through the friendly silence of the moon. They had been married all of a sudden, both caught up on the wings of adventure. They were young, free as air. Why should they wait? They kept it secret, a pair of romantics. Only Blaise Olifant, summoned from Medlow, and Janet Philimore were admitted into the conspiracy, and attended the wedding. At first Olivia had twinges of conscience. As a well-conducted young woman she ought to ask her old friend, Mr. Trivett, to stand in loco parentis and give her
away. But then there would be Mrs. Trivett and the girls to reckon with. Mr. Fenmarch, left out, might take offence. The news, too, would run through every Medlow parlour. Old John Freke, in his weekly letter to Lydia, would be sure to allude to the matter; and it was Lydia and the galley that she most desired to keep in ignorance. So they were married, by special licence, at the church in Ashley Place, one quiet, sunny morning, in the presence of Myra and the two witnesses they had convened. As they emerged into the sunshine after the ceremony, Olifant said to her: “I’ve never been so reluctant to give anything away in my life.” She asked a laughing “Why?” “Dog in the manger, I suppose.” He smiled whimsically. “I shall feel more of a bachelor than ever when I get back.” “You needn’t, unless you like.” She motioned slightly with her head towards Janet, talking to Alexis, a few feet away. “I’ve not been too busy to think of matchmaking. She’s the dearest of girls.” “But not my landlady.” Her happy laughter rippled forth, calling the others near. “He wants a law forbidding the marriage of landladies. But think of the advantage. Now you can have your landlady to stay with you —in strict propriety—if you will ask us.” “We settled that with Alexis last night,” said he. Three taxis were waiting. One for the bride and bridegroom. One, already piled with luggage, for Myra who after being fervently kissed in the vestry by Olivia, had said by way of congratulation: “Well, dearie, it’s better than being married in a Registry Office,” and had gone forth unemotionally to see that the trunks were still there. And one for Olifant and Janet. They drove to the station, to the train which was to take them on their way to the home which in their romanticism they had never troubled to see. “I’m sure it’s all right,” said Janet, who had been responsible for their taking “Quien Sabe.” “Father and I’ll be at The Point in a
fortnight. If you don’t want to see us, tie a white satin bow on the gate and we won’t mind a bit.” For General Philimore was the happy owner of one of the little hermitages on The Point, and like a foolish old soldier lived there in holiday times, instead of letting it for the few summer weeks at the yearly rental of his London flat; so that Janet assumed the airs of an authority on The Point, and wrote stern uncompromising business letters to agents threatening them with the displeasure of the daughter of a Major-General, if a “Quien Sabe” swept, garnished, and perfectly appointed, with a charwoman, ditto, in attendance, did not receive the bridal pair. “It’s not a palace, Mr. Triona,” she said. “What has it to do with me?” he answered. “A dream nest in a cliff for this bird wife of mine is all I ask for.” Olivia’s eyes smiled on him. Why was he so different from the rest of men—even from so fine a type as Blaise Olifant? She appraised them swiftly. The soldier had not yet been sunk into the scholar. He stood erect, clean built, wearing his perfectly fitting grey suit like uniform, his armless sleeve pinned across his chest, his lip still bearing the smart little military moustache, his soft grey hat at ever so slightly a swaggering angle on his neatly cropped head. A distinguished figure, to which his long straight nose added a curious note of distinction and individuality. But all that he was you saw in a glance: the gentleman, the soldier, the man of intellect. On the other hand, there stood the marvellous man that was her husband, hiding behind the drawn boyish face God knew what memories of pain heroically conquered and God knew what visions of genius. Although he had gone to a good tailor for his blue serge suit—she had accompanied him—he had the air of wearing clothes as a concession of convention. The lithe frame beneath seemed to be impatient of their restraint. They fitted in an easy sort of way, but were dominated by his nervous eager personality. One flash of a smile illuminating eyes and thin face, one flashing gesture of hand or arm, and for ought any one knew or cared, he might be dressed in chain armour or dungaree.
The little speech pleased her. She slipped her hand through the crook of his arm in the pride of possession. “Did you ever hear such an undomesticated pronouncement?” she laughed. “We’re going to change all that.” And the train carried them off to the great wonder and change of their lives. The train out of sight, Blaise Olifant stuck in his pocket the handkerchief he had been waving, and turned with a sigh. “I hope she’ll be happy.” “Why shouldn’t she?” asked Janet Philimore. She was a bright-cheeked, brown-eyed, brown-haired girl, with a matter-of-fact manner. “I know of no reason,” he replied. “I was expressing a hope.” He saw her to her homeward-bound omnibus and walked, somewhat moodily, on his road. After a day or two, the pleasures of London proving savourless, he returned to Medlow. But “The Towers” no longer seemed quite the same. He could not tell why. The house had lost fragrance. Meanwhile the pair had gone to the little toy home whose questioning name pointed to mystery. There were just three rooms in it, all opening on to a veranda full in sight (save for the configuration of the globe) of the African coast. On this veranda, sitting back, they lost sight of the whin-grown slope and the miniature sandy cove beneath; and their world was but a welter of sea, and its inhabitants but a few gulls, sweeping and swirling past them with a shy friendliness in their yellow eyes. In a dip of the sand-hill, just behind this elementary dwelling and communicating with it by a short covered way, stretched an old railway carriage divided into kitchen, pantry, bathroom, and bunks. “It’s the craziest place I’ve ever seen,” said Myra. “People will be living in old aeroplanes next.”
But the very craziness of the habitation made for their selfish joy. The universe, just for these twain, had gone joyously mad. A cocky little villa made to the model of a million others would have defeated the universe’s benign intention. Nothing could be nearer to Triona’s dream nest in a cliff. Their first half-hour’s exploring, hand in hand, was that of children let loose in a fairy tale castle. “There’s only one egg-cup,” croaked Myra, surveying an exiguous row of crockery. “How many more do we want?” cried Olivia. “We can only eat one egg at a time.” They passed out and stood on the edge of their small domain, surveying the sandy beach and the seaweed and shell-encrusted groin and the limitless sea, and breathed in the soft salt wind of all the heavens sweeping through their hair and garments, and he put his arm around her and kissed her—and he laughed and said, looking into her eyes: “Sweetheart, Heaven is empty and all the angels are here.” On sunny days they lived in the sea, drying themselves on their undisturbed half-moon of beach. “Where did you learn to swim?” she asked. He hesitated for a second, casting at her one of his swift, half furtive glances. Then he replied: “In the Volga.” She laughed. “You’re always romantic. I learned at commonplace Llandudno.” “Where’s your sense of relativity, beloved?” said he. “In Central Russia one regards the coast of Wales as fantastic fairyland.” “Still, you can go to Llandudno to-morrow, if you like—taking me with you, of course; but I shall never swim in the Volga, or the Caspian Sea, or Lake Baikal, or any of those places with names that have haunted me since I was a little girl.” “One of these days we’ll go—it may be some years, but eventually Russia must have a settled Government—and we’ll still be
young.” The sun and the hot sand on which she lay, adorable in deep red bathing kit and cap, warmed her through and through, flooding her with the sense of physical well-being. It was impossible that she should ever grow old. “It’s something to look forward to,” she said. Sometimes they hired a boat and sailed and fished. She admired his handiness and knowledge and prescience of the weather. Once, as the result of their fishing, they brought in a basket of bass and gar-fish, the latter a strange, dainty silver beast with the body of an eel and the tail of a trout and the beak of a woodcock, and in high spirits they usurped Myra’s railway-compartment kitchen, while he fried the catch for lunch. Olivia marvelled at his mastery. In spite of her sage and deliberate putting aside of the rose-coloured glasses of infatuation, in whatever aspect she viewed him, he stood supreme. From the weaving of high romance to the cooking of fish—the whole gamut of human activities—there was nothing in which he did not excel. Her trust in him was infinite. She lost herself in happiness. It took some days to arouse her to a sense of the outer world. A letter from Lydia reminded her of her friend’s pleasant ignorance. With the malice of the unregenerate feminine, she wrote: “I’m so sorry I can’t be bridesmaid as you had arranged. How can I, seeing that I am married myself? It happened all in a hurry, as the beautiful things in life do. The fuss of publicity would have spoilt it. That’s why we told nobody. This is much better than Dinard”—Sydney Rooke’s selection for the honeymoon. “I haven’t worn a hat since I’ve been here, and my way of dressing for dinner is to put on a pair of stockings; sometimes a mackintosh, for we love to dine on the veranda when it rains. It rained so hard last night that we had to fix up an umbrella to the ceiling like a chandelier to catch the water coming through the roof. So you will see that Alexis and I are perfectly happy. By the way, I’ve not told you what my name is. It is Mrs. Triona. . . .” And so on and so on at the dictate of her dancing gladness, freakishly picturing Lydia’s looks of surprise, distaste, and reprobation as she read the letter. Yet she finished graciously,
acknowledging Lydia’s thousand kindnesses, for according to her lights Lydia had done her best to put her on the only path that could be trod by comely and well-dressed woman. She sealed up her letter and, coming out on to the veranda where Alexis was correcting the proofs of an article, told him all about it. “Don’t you think we ought to please Lydia and go to Dinard and wear wonderful clothes, and mix with fashionable folk, and have expensive meals and gamble in the Casino, and dance and do our duty as self-respecting people?” “You have but to change yourself into whatever fairy thing you like, my princess,” said he, “and I will follow you. Where you are, the world is. Where you are not, there is the blankness of before creation.” Sitting that night, with his back against the veranda, he thought of this speech of the afternoon. Formulated a bit self-consciously, it was nevertheless true. The landscape, no matter what it was, existed merely as a setting for her. Even in this jewelled wonder of moonlit sea and sky there was the gap of the central gem. He rolled and lit another cigarette—this time, surely, the very last. Why she took so long to disrobe, he never strove to conjecture. Her exquisite feminine distance from him was a conception too tremulous to be gripped with a rough hand and brutally examined. That was the lure and the delight of her, mystical, paradoxical—he could define it only vaguely as the nearness of her set in a far-off mystery. At once she was concrete and strong as the sea, and as elusive as the Will-o’-the-Wisp of his dreams. Thus the imaginative lover; the man who, by imagining fantasies to be real, had made them real; who, grasping realities, had woven round them the poet’s fantasy. And meanwhile Olivia, secure in her happiness, kept him waiting and dreaming because she had made a romantic vow to record, before going to sleep, each day’s precious happenings in a diary
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  • 1. Solution Manual for Financial Reporting and Analysis 13th Edition by Gibson download pdf https://testbankmall.com/product/solution-manual-for-financial- reporting-and-analysis-13th-edition-by-gibson/ Visit testbankmall.com to explore and download the complete collection of test banks or solution manuals!
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  • 5. 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.
  • 6. 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.
  • 7. 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.
  • 8. 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
  • 9. 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
  • 10. 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.
  • 11. 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.
  • 12. 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.
  • 13. 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.
  • 14. 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
  • 15. 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."
  • 16. 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.
  • 17. 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.
  • 18. 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.
  • 19. 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.
  • 20. 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;
  • 21. 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
  • 22. 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.
  • 23. 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.
  • 24. 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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  • 26. H CHAPTER IX ERE, all in a rush of twenty-four hours, was a glut of incident for a young woman out for adventure. Triona had only made his effect on the romantically feminine within Olivia by his triumphant rescue. As to that he need have no misgivings. So once did Andromeda see young Perseus, calm and assured, deliver her from the monster. Triona’s felling of Mavenna appealed to the lingering savage woman fiercely conscious of wrong avenged; but his immediate and careless mastery of the situation struck civilized chords. She could see him dominating the sheepskin-clad tribe in the Urals (see Through Blood and Snow) until he established their independence in their mountain fastness. She could see him, masterful, resourceful, escaping from the Bolshevik prison and making his resistless way across a hostile continent. She could also appreciate, after this wonder-day at Richmond, the suppleness of his simple charm which won him food and shelter where food scarcely existed and shelter to a stranger was a matter of shooting or a bashing in of heads. As for Mavenna, her flesh still shuddered at the memory of those few moments of insult. What he said she could scarcely remember. The inextricable clutch of his great arms around her body and the detestable kisses eclipsed mere words. Unwittingly his hug had compressed her throat so that she could not scream. There had been nothing for it but the slipper unhooked by the free arm, and the doughty heel. Had she won through alone to her room, she would have collapsed—so she assured herself—from sickening horror. But the Deliverer had been there, as in a legend of Greece or Broceliande, and had saved her from the madness of the nymph terror stricken by Satyrs. The two extravagances had, in a way, counteracted each other, setting her, by the morning, in a normal equilibrium. She had tried to explain the phenomenon by referring to her having spent the night in striking a moral balance-sheet. And
  • 27. then had come the day, the wonderful day, in which the Deliverer had proved himself the perfect, gentle Knight. Can it be wondered that her brain swam with him? She went the next morning to Lydia’s hat shop, and, in the little room which Sydney Brooke had called her cubby hole, a nine-foot- square boudoir office, reeking with Lydia’s scent and with Heaven knows what scandals and vulgarities and vanities of post-war London, she poured out her tale of outrage. After listening with indulgent patience, Lydia remarked judicially: “I told you, my dear child, when you came to London, that the first lesson you had to learn was to take care of yourself.” Olivia flashed. She had taken care of herself well enough. But that brute Mavenna—what about him? “Everybody knows Mavenna,” replied Lydia. “No girl in her senses would have trusted herself alone with him.” “And, with that reputation, he’s a friend of yours and Sydney’s?” Lydia shrugged her plump shoulders. “Really, my dear, if one exacted certificates of lamb-like innocence, signed by a high celestial official, before you admitted anyone into the circle of your acquaintance, you might as well go and live on a desert island.” “But this man’s a beast and you’ve known it all along!” cried Olivia. “Only in one way.” “But—my God! Isn’t that enough?” Olivia stood, racked with disgust and amazement, over her mild-eyed, philosophic friend. “What would you have done if you had been in my place?” “I could never have been in your place,” said Lydia. “I should have been too wise.” “How?” “The knowledge of men, my dear, is the beginning of wisdom.” “And I ought to have known?”
  • 28. “Of course. At any rate, you’ll know in the future.” “I shall. You may be dead certain I shall,” declared Olivia, in her anger and excitement seizing a puckered and pleated cushion from the divan by which she stood. “And if even I—−-” “Don’t, darling; you’ll tear it,” said Lydia calmly. Olivia heaved the cushion back impatiently. “What I want to know is this. Are you and Sydney going to remain friends with Mavenna?” “I’m afraid we’ll have to,” replied Lydia. “Mavenna and Sydney are in all sorts of big things together.” “Well, when next you see him, Lydia, look well into his face and ask him what he thinks of the heel of my slipper and Mr. Triona’s fist. He’s not only a beast. He’s a worm. When I think of him picking himself up, after being knocked down by a man half his size——” She laughed a bit hysterically. “Oh—the creature is outside the pale!” Lydia shook her fair head. “I’m sorry for you, my dear. But he’s inside all right.” “Then I’m not going to be inside with him!” cried Olivia. And, like a little dark dust storm, she swirled out of the office and, through the shop, into the freedom and spaciousness of the streets. And that, for Olivia, was the end of night clubs and dancing as a serious aim in life, and a host of other vanities. A few mornings afterwards Lydia sailed into the flat and greeted Olivia as though nothing had happened. She seemed to base her philosophy of life on obliteration of the past, yesterday being as dead as a winter’s day of sixty years ago. Would Olivia lunch with Sydney and herself at some riverside club? Sydney, having collected Mauregard, would be calling for them with the car. The day was fine and warm; the prospect of the cool lawn reaching down to the plashing river allured, and she liked Mauregard. Besides, she had begun to take a humorous view of Lydia. She consented. Lydia began to talk of her wedding, fixed for the middle of July, of the clothes that she had and the clothes that she hadn’t—the ratio of the
  • 29. former to the latter being that of a loin-cloth to the stock of Selfridge’s. When she was serious minded, Lydia always expressed herself in terms of raiment. “And you’ll have to get some things, too, as you’re going to be bridesmaid.” “Am I?” asked Olivia, this being the first she had heard of it. “And who’s going to be best man—Mavenna?” Lydia looked aghast. So might a band of primitive Christians have received a suggestion of inviting the ghost of Pontius Pilate to a commemorative supper. “My dear child, you don’t suppose we’re going to ask that horror to the wedding?” “The other day,” Olivia remarked drily, “I understood that you and Sydney loved him dearly.” Lydia sighed. “I’m beginning to believe that you’ll never understand anything.” So the breach, if breach there were, was healed. Olivia, relating the matter to Triona at their next meeting, qualified Lydia’s attitude as one of callous magnanimity. Meanwhile her intimacy with the young man began to ripen. One evening Janet Philimore invited her to dine at the Russian circle of a great womans’ club, which was entertaining Triona at dinner. This was the first time she had seen him in his character of modest lion; the first time, too, she had been in a company of women groping, however clumsily, after ideals in unsyncopated time. The thin girl next to her, pretty enough, thought Olivia, if only she had used a powder puff to mitigate the over-assertiveness of a greasy skin, and had given less the impression of having let out her hair to a bird for nesting purposes, and had only seized the vital importance of colour—the untrue greeny daffodil of her frock not being the best for a sallow complexion—the girl next to her, Agnes Blenkiron, started a hectic conversation by enquiring what she was going to do in Baby Week. The more ignorant Olivia professed herself to be of babies and their antecedents, especially the latter,
  • 30. the more indignantly explicit became Miss Blenkiron. Olivia listened until she had creepy sensations around the roots of her hair and put up an instinctive hand to assure herself that it was not standing on end. Miss Blenkiron talked feminist physiology, psychology, sociological therapeutics, until Olivia’s brain reeled. Over and over again she tried to turn to her hostess, who fortunately had a pleasant male and middle-aged neighbour, but the fair lady, without mercy, had her in thrall. She learned that all the two or three thousand members of the club were instinct with these theories and their aims. She struggled to free herself from the spell. “I thought we were here to talk about Russia,” she ventured. “But we are talking about Russia.” Miss Blenkiron shed on her the lambency of her pale blue eyes. “The future of the human race lies in the hands of the millions of Russian babies lying in the bodies of millions of Russian women just waiting to be born.” A flash of the devil saved Olivia from madness. “That’s a gigantic conception,” she said. “It is,” Miss Blenkiron agreed, unhumorously, and continued her work of propaganda, so that by the time the speeches began Olivia found herself committed to the strenuous toil of a lifetime as a member of she knew not what societies. The only clear memory she retained was that of a tea engagement some Sunday in a North London garden city where Miss Blenkiron and her brother frugally entertained the advanced thinkers of the day. In spite of the sense of release from something vampiric, when the speeches hushed general conversation, she recognized that the strange talk had been revealing and stimulating, and she brought a quickened intelligence to the comprehension of the gathering. To all these women the present state of the upheaved world was of vast significance. In Lydia’s galley no one cared a pin about it, save Sydney Rooke, who cursed it for its interference with his income. But here, as was clearly conveyed in the opening remarks of the chairwoman, a novelist of distinction, every one was intellectually concerned with its infinite complexity of aspect. To them, the guest
  • 31. of the evening, emerging as he had done from the dizzying profundities of the whirlpool, was a figure of uncanny interest. “It’s the first-hand knowledge of men like him that is vital,” Miss Blenkiron whispered when the chairwoman sat down. “I should so much like to meet him.” “Would you?” said Olivia. “That’s easily managed. He’s a great friend of mine.” And she was subridently conscious of having acquired vast and sudden merit in her neighbour’s eyes. Triona pleased her beyond expectation. The function, so ordinary to public-dinner-going London, was new to her. She magnified the strain that commonplace, even though sincere, adulation could put upon a guest of honour. She felt a twinge of apprehension when he stood up, in his loose boyish way, and brushing his brown hair from his temples, began to speak. But in a moment or two all such feelings vanished. He spoke to this assembly of a hundred, mostly women, much as, in moments of enthusiasm, he would speak to her. And, indeed, often catching her eye, he did speak to her, subtly and flatteringly bringing her to his side. Her heart beat a bit faster when, glancing around and seeing every one hanging on his words, she realized that she alone, of all this little multitude, held a golden key to the mystery of the real man. There he talked, with the familiar sway of the shoulders, and, when seeking for a phrase, with the nervous plucking of his lips; talked in his nervous, picturesque fashion, now and then with a touch of the poet, consistently modest, only alluding to personal experience to illustrate a point or to give verisimilitude to a jest. He developed his feminist theme logically, dramatically, proving beyond argument that the future of civilization lay in the hands of the women of the civilized world. He had a great success. Woman, although she knows it perfectly well, loves to be told what she wants and the way to get it: she will never follow the way, of course, having a tortuous, thorny, and enticing way of her own; but that doesn’t matter. The principle, the end, that is the thing: it justifies any amazing means. He sat down
  • 32. amid enthusiastic applause. Flushed, he sought Olivia’s distant gaze and smiled. Then she felt, thrillingly, that he had been speaking for her, for her alone, and her eyes brightened and flashed him a proud message. She met him a while later in the thronged drawing-room of the club, rather a shy and embarrassed young man, heading a distinct course toward her through a swarm of kind yet predatory ladies. She admired the simple craftsmanship of his approach. “How are you going to get home?” he asked. The adorable carelessness of twenty shrugged its shoulders. “I don’t know. The Lord will provide.” “If you can’t find a taxi, will you walk?” The question implied a hope, so obvious that she laughed gaily. “There are buses also and tubes.” “In which you can’t travel alone at this time of night.” She scoffed: “Oh, can’t I?” But his manifest fear that she should encounter satyrs in train or omnibus pleased her greatly. “Father’s dining at his club close by and is calling for me. He will see that you get home safely,” said Janet Philimore. “It’s miles out of your way, dear,” said Olivia. “I’ll put myself in the hands of Mr. Triona.” So, taxis being unfindable, they walked together through the warm London night to Victoria Street. It was then that he spoke of his work, the novel just completed. Of all opinions on earth, hers was the one he most valued. If only he could read it to her and have the priceless benefit of her judgment. Secretly flattered, she modestly depreciated, however, her critical powers. He persisted, attributing to her unsuspected qualities of artistic perception. At last, not reluctantly, she yielded. He could begin the next evening. The reading took some days. Olivia, new to creative work, marvelled exceedingly at the magic of the artist’s invention. The personages of the drama, imaginary he said, lived as real beings. She regarded their creation as uncanny.
  • 33. “But how do you know she felt like that?” He shrugged his shoulders and smiled. “I can’t conceive her feeling otherwise.” Yet, for all her wonder, she brought her swift intelligence to the task of criticism. Not since her mother’s illness had she taken anything so seriously. She lived in the book, walking meanwhile through an unreal world. Her golden words, on the other hand, the young man captured eagerly and set down in the margin of the manuscript. Half-way through the reading, they were on terms of Christian names. Minds so absorbed in an artistic pursuit grew impatient of absurd formalities of address. They slipped almost imperceptibly into the Olivia and Alexis habit. At the end they pulled themselves up rather sharply, with blank looks at an immediate future bereft of common interest. “I’ll have to begin another, right away, so that you can be with me from the very start,” he said. “Have you an idea?” “Not yet.” “When will you have one?” He didn’t know. What man spent with the creative effort of a novel has the vitality to beget another right away? He feels that the very last drop of all that he has known and suffered and enjoyed has been used to the making of the book. For the making of another nothing is left. “I suppose I’ll have to lie fallow for a week or so,” said the young optimist. “And as soon as things begin to sprout you’ll let me know?” asked Olivia, forgetful that before harvest there must be seed time. He promised; went home and cudgelled tired brains; also cudgelled, for different reasons, an untired and restless soul. Let him make good, not ephemerally as the picturesque narrator of personal adventure, but definitely, with this novel as the creative artist—the fervent passion of his life—and he would establish himself
  • 34. in her eyes, in her mind, in her heart; so that treading solid ground, he could say to her: “This is what I am, and for what I am, take me. All that has gone before was but a crude foundation. I had to take such rubbish and rubble as I could find to hand.” But until then, let him regard her as a divinity beyond his reach, rendering her service and worship, but forbearing to soil her white robe with a touch as yet unhallowed. Many a time, they could have read no more that day. Just one swift movement, glance or cry on the part of the man, and the pulses of youth would have throbbed wildly together. He knew it. The knowledge was at once his Heaven and his Hell. A less sensitive human being would not have appreciated the quivering and vital equipoise. Many a time he parted from her with the farewell of comradely intimacy on his lips, and when the lift had deposited him on the street level his heart had been like lead and his legs as water, so that he stumbled out into the lamp-lit dark of night like a paralytic or a drunken man. And that which was good in him warred fiercely against temptations more sordid. As far as he knew, she was a woman of fortune. So did her dress, her habit of life, her old comfort-filled Medlow home, proclaim her. Of her social standing as the daughter of Stephen Gale who bawled out bids for yelts and rams in the Medlow market place, he knew or understood very little. Her fortune was a fact. His own, the few hundreds which he had gained by Through Blood and Snow, was rapidly disappearing. The failure of the new book meant starvation or reversion to Cherbury Mews. Married to a woman with money he could snap his fingers at crust or livery. . . . For the time he conquered. The end of the reading coincided more or less with Midsummer quarter-day. Bills from every kind of coverer or adorner of the feminine human frame fell upon her like a shower of autumn leaves. She sat at her small writing desk, jotted down the amounts, and added them up with a much sucked pencil point. The total was incredible. With fear at her heart she rushed round to her bank for a note of her balance. It had woefully decreased since January.
  • 35. Payment of all these bills would deplete it still more woefully. The rent of “The Towers” and the diminishing income on the deposit account were trivial items set against her expenditure. She summoned Myra. “We’re heading for bankruptcy.” “Any fool could see that,” said Myra. “What are we going to do?” “Live like Christians instead of heathens,” replied Myra. “If you would come to Chapel with me one Sunday night you could be taught how.” Here Myra failed. She belonged to a Primitive Non-Conformist Communion whose austere creed and drab ceremonial had furnished occasion for Olivia’s teasing wit since childhood. Heathendom, ever divorced from Lydian pleasures, presented infinitely more reasons for existence than Myra’s Calvinism. “It seems funny that a dear old thing like you can revel in the idea of Eternal Punishment.” “I haven’t got much else to revel in, have I?” said Myra grimly. “I suppose that’s true,” said Olivia thoughtfully. “But it isn’t my fault, is it? If you had wanted to revel, mother and I would have been the last people to prevent you. Why not begin now? Go and have a debauch at the pictures.” “You began by talking of bankruptcy,” said Myra. “And you prescribed little Bethel. I’d sooner go broke.” “You’ll have your own way, as usual,” said Myra. “And if I go broke, what’ll you do?” asked Olivia, unregenerately enjoying the conversation. “I suppose I’ll have to put you together again,” replied Myra, with no sign of emotion on her angular, withered face. Olivia leaped from her chair. “I’m a beast.”
  • 36. “That can’t be,” said Myra, “seeing that it was I as brought you up.” That was the end of the argument. Olivia recognized in Myra every useful quality save that of the financier. She dismissed Myra from her counsels. But the state of her budget cost her a sleepless night or two. At the present rate of expenditure a couple of years would see her penniless. For the first time since her emancipation from Medlow fetters she had the feeling of signing her own death- warrant on every cheque. Heroic resolves were born of these days of depression. As a climax to her worries, came Bobby Quinton, one afternoon. What had he done to offend his dearest of ladies? Why had she stopped the dancing lessons? Why did Percy’s see her no more? “I’m fed up with Percy’s and the whole gang,” said Olivia. “Not including me, surely?” cried the young man, with a dog’s appeal in his melting brown eyes. She was kind. At first, she had not the heart to pack him off to the froth and scum of social life to which he belonged. He had the charm of unsuccessful youth so pathetic in woman’s eyes. “If you are,” said he, “I’m done for. I’ve no one to look to but you, in the wide world.” Here was responsibility for the safety of a human soul. Olivia gave him sound advice, repeating many an old argument and feeling enjoyably maternal. But when Bobby grew hysterical, and, with mutation of sex, quoted the Indian Love Lyrics and professed himself prepared to die beneath her chariot wheels, and threatened to do so if she disregarded his burning passion, she admonished him after the manner of twentieth-century maidenhood. “My good Bobby, don’t be an ass.” But Bobby persisted in being an ass, with the zeal of the dement. He became the fervent lover of the cinquecento Bandello—and, with his dark eyes and hair, looked the part. Imploring he knelt at the feet of the divinity.
  • 37. “That’s all very well, my dear boy,” said Olivia, unmoved by his rhapsody, “all very nice and all very beautiful. But what do you want me to do?” Of course he wanted her to marry him, there and then: to raise him from the Hell he was in to the Heaven where she had her pure habitation. With her he could do great things. He guaranteed splendid achievements. “Before a woman marries a man,” said Olivia, “she rather wants an achievement or two on account.” “Then you don’t love me, you don’t trust me?” exclaimed the infatuated young man, ruffling his sleek black hair. “I can’t say that I do,” replied Olivia, growing weary. “If you tell me what sort of fascination you possess, I’ll give it due consideration.” “Then I may as well go away and blow my brains out,” he cried tragically. “You might better go and use such brains as you have in doing a man’s work,” retorted Olivia. He reproached her mournfully. “How unkind you are.” “If you came here as a window-cleaner or a lift porter I might be kinder. You’re quite a nice boy,” she went on after a pause, “otherwise I shouldn’t have anything to do with you. But you haven’t begun to learn the elements of life. You’re utterly devoid of the sense of duty or responsibility. Like the criminal, you know. Oh, don’t get angry. I’m talking to you for your good. Pretending to teach idle women worthless dancing isn’t a career for a man. It’s contemptible. Every man—especially nowadays—ought to pull his weight in the world. The war’s not over. The real war is only just beginning. Instead of pulling your weight you think it’s your right to sit on a cushion, a passenger—or a Pekie dog—and let other people pull you.” “You don’t understand——”
  • 38. “Oh, yes I do. One has to live, and at first we take any old means to hand. But you’ve been going on at this for a couple of years and haven’t tried to get out of it. You like it, Bobby——” “I loathe it.” “You don’t,” she went on remorselessly, with her newly acquired knowledge of what a man’s life could be. “All you loathe is the work —especially when it doesn’t bring you in as much money as you want. You hate work.” Resentment gradually growing out of amusement at his presumptuous proposal had wrought her to a pitch of virtuous indignation. Here was this young man, of cultivated manners, intelligent, able-bodied, attractive, rejecting any kind of mission in existence, and—— “Look here, Bobby,” she said, rising from her chair by the tea- table and dominating him with a little gesture, “don’t get up. You sit there. You’ve asked me to marry you, because you think I’m rich. Hold your tongue,” she flashed, as he was about to speak. “I’ll take all the love and that sort of thing for granted. But if I was poor you wouldn’t have thought of it. At the back of your mind you imagine that if I married you, we could lead a life of Percy’s and the Savoy and Monte Carlo and the South Sea Islands, and you needn’t do another stroke of work all your life long.” He leaned forward in his chair protesting eagerly that it wasn’t true. He would marry her to-morrow were she penniless. She had his salvation soul and body in her hands. He hungered for work; but the coils of his present life had a strangle-hold on him. Suddenly he rose and advanced a step towards her. “Listen, Olivia. If you won’t marry me, will you help me in other ways? I’m desperate. You think you know something about the world. But you don’t. I’m up against it. It may mean prison. For the love of God lend me a couple of hundred pounds.” The ugly word prison sent a stab through her heart; but immediately afterwards the common-sense of her Gale ancestry told
  • 39. her either that he was lying, or, if it were true, that he deserved it. She asked coldly: “What have you been doing?” “I can’t tell you,” he said. “You must trust me.” “But I don’t and that is why I can’t lend you two hundred pounds.” “You refuse?” His soft voice became a snarl and his lip curled unpleasantly back beneath the little silky moustache. “Of course I do.” “I don’t know how you dare, after all the encouragement you’ve given me.” She stared at him aghast. “Encouragement?” “Yes. Didn’t you make me dance attendance on you at Brighton? Haven’t you brought me here over and over again? You’ve behaved damnably to me. You’ve made me waste my time. I’ve turned other women who would have only been too glad——” In horror, she flew to the door and threw it open. “Go,” she said. And speeding across the hall she threw open the flat door. “Go,” she said again. She crossed the landing and rang the lift bell and returned to the hall, where he met her and threw himself on his knees and looked up at her with wild, hunted eyes. “Forgive me, Olivia. For God’s sake forgive me. I was mad. I didn’t know what I was saying. Shut that door and I’ll tell you everything.” But Olivia passed him by into the sitting-room, and stood with her back against the door until she heard the clash of the lift gates and the retreating footsteps of Bobby Quinton. A short while ago she had nearly quarrelled with Mauregard because, in a wordy dissertation on the modern young men who
  • 40. lived on women, he instanced Bobby as possibly coming within the category. Now she knew that Mauregard was right. She felt sick. Also deadly ashamed of her superior attitude of well-meant reprimand. She burned with the consciousness of tongue in cheek while he listened. Well, that was the end of the Lydian galley. She did not recover till the next afternoon, when Triona called to take her to the Blenkirons’ Sunday intellectual symposium in Fielder’s Park. She welcomed him impulsively with both hands outstretched, as a justification of her faith in mankind. “You can’t tell how glad I am to see you.” “And you,” said he, kissing first one hand and then the other, “can’t tell how good I think God is to me.”
  • 41. H CHAPTER X E brought great news. Not only had his publishers thought well of the novel and offered him good terms, including a substantial advance, but they professed themselves able to place it serially in England for a goodly sum. They had also shown him the figures of the half-yearly returns on American sales of Through Blood and Snow which transcended his dreams of opulence. “I had forgotten America,” he said naïvely. “You’re nothing, if not original,” she laughed. “That’s what I like about you.” He insisted on the wild extravagance of a taxi to the garden city. All that money he declared had gone to his head. He felt the glorious intoxication of wealth. When they were about to turn off the safe highway into devious garden-city paths, he said: “Let us change our minds and go straight on to John o’ Groats.” “All right. Let us. We’re on the right road.” He swerved towards her. “Would you? Really?” She opened her bag and took out her purse. “I’ve got fifteen and sevenpence. How much have you?” “About three pounds ten.” She sighed. “This unromantic taxi man would charge us at least five pounds to take us there.” “We can turn back and fill our pockets at the bank.” “It’s Sunday.” “I never before realized the blight of the British Sabbath.” “So we’re condemned to Fielder’s Park.” “But one of these days we’ll go, you and I together, to John o’ Groats—as far as we can and then——”
  • 42. “And then?” “And then we’ll take a ship and sail and sail until we come to the Fortunate Isles.” “You’ll let Myra come too?” said Olivia, deliciously anxious to keep to the playful side of an inevitable road. “Of course. We’ll find her a husband. The cabin-boy. Pour mousse un chérubin.” “And when we get to the Fortunate Isles, what should we do there?” “We shall fill our souls with sunlight, so that we could use it when we came back to our work in this dark and threatening modern world.” The girl’s heart leapt at the reply. “I’ll go up to John o’ Groats with you whenever you like,” she said. But the taxi, at that moment drawing up before the detached toy villa, whose “Everdene” painted on the green garden gate proclaimed the home of the Blenkirons, inhibited Triona’s reply. They found within an unbeautiful assemblage of humans inextricably mingled with crumbling cake and sloppy cups of tea and cigarette smoke. Agnes, shining with heat and hospitality, gave them effusive welcome and, extricating her brother from a distant welter, introduced him to the newcomers. He was a flabby-faced young man with a back-thatch of short rufous hair surmounting a bald forehead. By his ears grew little patches of side whiskers. He wore an old unbuttoned Norfolk jacket and a red tie in a soft collar without an under pin. He greeted them with an enveloping clammy hand. “So good of you to come, Miss Gale. So glad to meet you, Mr. Triona. We have heard so much about you. You will find us here all very earnest in our endeavour to find a Solution—for never has human problem been so intricate that a Solution has not been discovered.” “What’s the problem?” asked Olivia.
  • 43. “Why, my dear lady, there’s only one. The Way Out—or, if you have faith—The Way In.” He caught a lean, thin-bearded man by the arm. “Dawkins, let me introduce you to Miss Gale. Mr. Dawkins is our rapporteur.” “You haven’t any tea,” said Dawkins rebukingly, as though bidden to a marriage feast she had no wedding garment. “Come with me.” He frayed her a passage through the chattering swarm that over- filled the little bow-windowed sitting-room and provided her with what seemed to be the tepid symbols of the brotherhood. “What did you think of Roger’s article in this week’s Signal?” “Who is Roger, and what is The Signal?” Olivia asked simply. Dawkins stared at her for a second and then, deliberately turning, wormed his path away. Olivia’s gasp of surprise was followed by a gurgle of laughter which shook her lifted cup so that it spilled. The sight of a stained skirt drew from her a sharp exclamation of dismay. Agnes Blenkiron disengaging herself from the cluster round the tea-table came to the rescue. What was the matter? Olivia explained. “Oh, my dear,” said Agnes, “I ought to have told you. It’s my fault. Dawkins is such a touchy old thing. Roger, of course, is my brother—didn’t you know? And The Signal is our weekly. Dawkins is the editor.” “I’m awfully sorry,” said Olivia, “but ought I to read The Signal?” “Why, of course,” replied Agnes Blenkiron intensely. “Everybody ought to read it. It’s the only periodical that matters in London.” Olivia felt the remorse of those convicted of an unpardonable crime. “I’ll get a copy to-morrow at the bookstall at Victoria Station.” Agnes smiled in her haggard way. “My dear, an organ like The Signal doesn’t lie on the bookstalls, like Comic Cuts or The Fortnightly Review. It’s posted to private subscribers, or it’s given away at meetings.”
  • 44. “Who pays for the printing of it?” asked the practical Olivia, who had learned from Triona something of the wild leap in cost of printed matter. “Aubrey Dawkins finds the money. He gets it in the City. He has given up his heart and soul to The Signal.” “I’ve made an enemy for life,” said Olivia penitently. Miss Blenkiron reassured her. “Oh, no you haven’t. We haven’t time for enemy making here. Our business is too important.” Olivia in a maze asked: “What is your business?” “Why, my dear child, the Social Revolution. Didn’t you know?” “Not a bit,” said Olivia. She learned many astonishing things that afternoon, as she was swayed about from introduction to introduction among the eagerly disputing groups. Hitherto she had thought, with little comprehension, of the world-spread social unrest. Strikes angered her because they interfered with necessary reconstruction and only set the working classes in a vicious circle chasing high wages and being chased in their turn by high prices. At other demands she shuddered, dimly dreading the advent of Bolshevism. And there she left it. She had imagined that revolutionary doctrines were preached to factory hands either secretly by rat-faced agents, or by brass- throated, bull-necked demagogues. That they should be accepted as a common faith by a crowd of people much resembling a fairly well- to-do suburban church congregation stirred her surprise and even dismay. “I don’t see how intelligent folk can hold such views,” she said to Roger Blenkiron, who had been defending the Russian Soviet system as a philosophic experiment in government. He smiled indulgently. “Doesn’t the fault lie rather in you, dear lady, than in the intelligent folk?” “Would that argument stand,” she replied, “if you had been maintaining that the earth was flat and stood still in space?”
  • 45. “No. The roundness and motion of the earth are ascertained physical facts. But—I speak with the greatest deference—can you assert it to be a scientific fact that a community of human beings are a priori incapable of managing their own affairs on a basis of social equality?” “Of course I can,” Olivia declared, to the gentle amusement of standers-by. “Human nature won’t allow it. With inequalities of brain and character social equality is impossible.” “Dear Lady”—she hated the apostrophe as he said it and the lift of the eyebrows which caused an upward ripple that was lost in the far reaches of his bald forehead. “Dear Lady,” said he, “in the Royal Enclosure at Ascot you can find every grade of human intellect, from the inbred young aristocrat who is that much removed”—he flicked a finger nail—“from a congenital idiot to the acute-brained statesman; every grade of human character from the lowest of moral defectives to the highest that the present civilization can produce. And yet they are all on a social equality. And why? They started life on a common plane. The same phenomenon exists in a mass-meeting of working- men—in any assemblage of human beings of a particular class who have started life on a common plane. Now, don’t you see, that if we abolished all these series of planes and established only one plane, social equality would be inevitable?” “I don’t see how you’re going to do it.” “Ah! That’s another question. Think of what the task is. To make a clean sweep of false principles to which mankind has subscribed for—what do I know—say—eight thousand years. It can’t be done in a day. Not even in a generation. If you wish to render a pestilence- stricken area habitable, you must destroy and burn for miles around before you can rebuild. Extend the area to a country—to the surface of the civilized globe. That’s the philosophic theory of what is vulgarly called Bolshevism. Let us lay waste the whole plague- stricken fabric of our civilization, so that the world may arise, a new Phœnix, under our children’s hands.”
  • 46. “You have put the matter to Miss Gale with your usual cogency, my dear Roger,” said Dawkins, who had joined the group. “Perhaps now she may take a less flippant view of our activities.” He smiled, evidently meaning to include the neophyte in the sphere of his kind indulgence. But Olivia flushed at the rudeness of his words. Triona who, hidden from Olivia by the standing group, had been stuffed into a sedentary and penitential corner with two assertive women and an earnest young Marxian gasfitter, and had, nevertheless, kept an alert ear on the neighbouring conversation, suddenly appeared once more to her rescue. “Pardon me, sir,” said he, “but to one who has gone through, as I have done, the Bolshevist horrors which you advocate so complacently, it’s your view that hardly seems serious.” “Atrocities, my dear friend,” said the seer-like Dawkins, “are proverbially exaggerated.” “There’s a fellow like you mentioned in the Bible,” retorted Triona. “I have always admired Didymus for his scientific mind,” said Dawkins. Triona pulled up his trouser leg and exposed his ankle. “That’s the mark of fetters. There was a chain and a twelve pound shot at the end of it.” “Doubtless you displeased the authorities,” said Dawkins blandly. “Oh, I’ve read your book, Mr. Triona. But before judging I should like to hear the other side.” “I’m afraid, Mr. Blenkiron,” said Triona, growing white about the nostrils, to his host who stood by in a detached sort of manner, with his hands on his hips, “I’ve unconsciously abused your hospitality.” Blenkiron protested cheerfully. “Not a bit, my dear fellow. We pride ourselves on our broad mindedness. If you preached reactionary Anglicanism here you would be listened to with respect and interest. On the other hand, we expect the same consideration to be shown to the apostles—if you will pardon the word—of our
  • 47. advanced thought. Your experiences were, beyond doubt, very terrible. But we admit the necessity of a reign of terror. We shall have it in this country within the next ten years. Possibly—probably —all of us here and all the little gods we cling to will be swept away like the late Russian aristocracy and intelligentsia. But suppose we are all—Dawkins, my sister, and myself—prepared to suffer martyrdom for the sake of humanity, what would you have to say against us? Nay—you can be quite frank. Words cannot hurt us.” “I should say you ought to be tied up in Bedlam,” said Triona. “Do you agree with that, Miss Gale?” said Roger Blenkiron, turning on her suddenly. She reflected for a moment. Then she replied: “If you can prove beyond question that in fifty years’ time you will create a more beautiful world, there’s something in your theories. If you can’t, you all ought to be shot.” He laughed and held out his hand. “That’s straight from the shoulder. That’s what we like to hear. Shake hands on it.” He drew a little book from his pocket and scribbled a memorandum. “You’re on the free-list of The Signal. I think Agnes has your address. You’ll find in it overwhelming proof. Perhaps, Mr. Triona, too, would like——” But Triona shook his head. “As a technical alien perhaps it would be inadvisable for me to be in receipt of revolutionary literature.” “I quite understand,” smiled Blenkiron, returning the book to his pocket. Dawkins melted away. Other guests took leave of their host. Triona and Olivia, making a suffocating course towards the door, were checked by Agnes Blenkiron who was eager to introduce them to Tom Pyefinch who, during the war had suffered, at the hands of a capitalist government, the tortures of the hero too brave to fight. “Oh, no, no,” cried Olivia horrified. Agnes did not hear. But Pyefinch, a pallid young man with a scrubby black moustache, was too greatly occupied with his immediate circle to catch his hostess’s eye. From his profane lips Olivia learned that patriotism was the most blatant of superstitions:
  • 48. that the attitude of the fly preening itself over its cesspool was that of the depraved and mindless being who could take pride in being an Englishman. He was not peculiarly hard on England. All other countries were the mere sewerages of the nationalities that inhabited them. The high ideals supposed to crystallize a nation’s life were but factitious and illusory, propagated by poets and other decadents in the pay of capitalists: in reality, patriotism only meant the common cause of the peoples floundering each in its separate sewer. . . . Mere rats, he declared, changing his metaphor. That was why he and every other intelligent man in the country refused to join in the rat fight which was the late war. Olivia clutched Triona’s arm. “For God’s sake, Alexis, let us get out of this. It makes me sick.” They drew deep breaths when they escaped into the fresh air. To Olivia, the little overcrowded drawing-room, deafening with loud voices, sour with the smell of milky tea and Virginian tobacco, reeking almost physically with the madness of anarchy, seemed a miniature of the bottomless pit. The irony of the man’s talk—the need to purify by flame a plague-stricken area! God once destroyed Sodom and Gomorrah. Why did He not blast with fire from heaven this House of Pestilence? Alexis Triona laughed sympathetically at her outburst. “I confess they’re rather trying,” he remarked. “Whenever you hear English people say they belong to the intelligentsia, you may be sure they’re frightened at common sense as not being intellectual enough. Blenkiron and Dawkins are fools of the first water; but Pyefinch is dangerous. I am afraid I lost my temper,” he added after a few steps. “You were splendid,” said Olivia. More than ever did he seem the one clear-brained, purposeful man of her acquaintance in the confused London world. Rapidly she passed them in review as she walked. Of the others Mauregard was the best; but he was spending his life on fribbles, his highest heaven
  • 49. being a smile on the lips of a depraved dancing-woman. Then, Sydney Rooke, Mavenna, and, even worse now than Mavenna, the unspeakable Bobby Quinton. So much for the Lydian set of professed materialists and pleasure-seekers. In accepting Agnes Blenkiron’s invitation she had pleasurable anticipation of entering a sphere of earnest thinkers and social workers who might guide her stumbling footsteps into the path of duty to herself and her kind. And to her dismay she had met Dawkins and Blenkiron and Pyefinch, earnest, indeed, in their sophistry and mad in their theories of destruction. Her brain was in a whirl with the doctrines to which she had listened. She felt terrified at she knew not what. Even Lydia’s cynical world was better than this. Yet between these two extremes there must be a world of high endeavour, of science, art, philanthropy, thought; that in which, she vaguely imagined, Blaise Olifant must have his being; even that of the women at the club dinner. But her mind shook off women as alien to its subconscious argument. In this conjectural London world one man alone stood out typical—the man striding loosely by her side. A young careless angel, he had delivered her from Mavenna. A man, he had exorcised her horror of Bobby Quinton. And now, once more, she saw him, in her girlish fancy, a heroic figure, sane, calm, and scornful, facing a horde of madmen. They walked, occasionally losing their way and being put on it by chance encounters, through the maze of new and distressingly decorous avenues, some finished, others petering out, after a few houses, into placarded building lots or waste land; a wilderness not of the smug villa-dom of old-established suburbs, but of a queer bungalow-dom assertive, in its distinctive architecture, of unreal pursuit of Aspirations in capital letters. Most of the avenues abutted on a main street of shops with pseudo-artistic frontages giving the impression that the inhabitants of the City could only be induced to satisfy the vulgar needs of their bodies by the lure of the æsthetic. “Don’t let us judge our late friends too harshly,” said Triona waving an arm. “All this is the Land of Self-Consciousness.” At last they made their way through the solider, stolider fringes of the main road, and emerged on the great thoroughfare itself, wide
  • 50. and unbusied on this late summer Sunday afternoon. Prosaically they lingered, waiting for an infrequent omnibus. “Thank goodness, we’re out of the Land of Self-Consciousness,” said Olivia. “The Great North Road is too big a thing.” Their eyes met in a smile. “I don’t forget your love of big things,” said he. “It’s inspiring. Yes. It’s a big thing. And it doesn’t really begin in London. It starts from Land’s End—and it goes on and on through the heart of England and through the heart of Scotland carrying two nations’ history on its flanks, caring for nothing but its appointed task, until it sighs at John o’ Groats and says: ‘My duty’s done.’ There’s nothing that stirs one’s imagination more than a great road or a great river. Somehow I prefer the road.” “You’re nearer to it because it was made by man.” “How our minds work together!” he cried admiringly “I only have to say half a thing and you complete it. More than that—you give my meaningless ideas meaning. Yes. God’s works are great. But we can’t measure them. We have no scale for God, But we have for Man, and so Man’s big works thrill us and compel us.” “What big thing could we do?” asked Olivia. “Do you mean humanity—or you and I together?” “Two human beings thinking alike, and free and honest.” Instinctively she took his arm and her step danced in time with his. “Oh, you don’t know how good it is to feel real. Let us do something big in the world. What can we do?” “You can help me to the very biggest thing in all the universe— for me,” he cried, pressing her arm tight against him. Her pulses throbbed. She knew that further argument on her part would be but exquisite playing with words. The hour which, in her maidenly uncertainty she had dreaded, had now come, and all fear had passed away. Yes; now she was real; now she was certain that her love was real. Real man, real woman. Her heart leaped to him with almost the shock of physical pain. Again in a flash she swept
  • 51. the Lydian and the Blenkiron firmament and exulted. Yet in her happiness she said with very foolish and with very feminine guile: “Ah, my dear Alexis, that’s what I’ve longed for. If only I could be of some little help to you!” “Help?” He laughed shortly and halted and swung her round. “Have you ever tried to think what you are to me? Would you like me to tell you?” She disengaged herself and walked delicately on. “It may pass the time till the bus comes,” she said. He began to tell her. And three minutes afterwards the noisy, infrequent motor-bus passed them by, unheeded and even unperceived.
  • 52. S CHAPTER XI OMEWHERE on the South Coast, screened from the vulgar by the trap of a huge watering-place, is a long, thin, sandy promontory sticking out to sea, like an innocent rib of wilderness. Here there is no fun of the fair, because there is no fair to provide the fun. There are no taverns, no boarding-houses, no lodgings. One exclusive little hotel rules the extreme tip of the tongue of land in consort with the miniature jetty and quay by which, in late exciting times, strange craft were moored, flying the white ensign and hoar with North Sea brine and deadly secrets. The rest of the spit is peppered with a score of little shy houses, each trying to hide itself from its neighbours, in the privacy of its own sandpit. If your house is on the more desirable side of it, you can look out over the vastness of the sea with the exhilarating certainty (if your temperament may thereby be exhilarated) that there is nothing but blue water between you and the coast of Africa. If your house is, less fortunately, on the other side, your view commands a spacious isle-studded harbour fringed by distant blue and mysterious hills. But it is given to any one to walk out of the back of his little hermitage, and, standing in the dividing road, to enjoy, in half a minute, both aspects at once. It is called esoterically by its frequenters “the Point,” so that the profane, map-searching, may not discover its whereabouts. Just high enough to be under the lee of a sand-hill, with its front windows and veranda staring at the African coast, some thousand miles away, stood the tiniest, most fragile and most absurd of the habitations. Its name was “Quien Sabe,” suggestive of an imaginative abandonment of search after nomenclature by the original proprietor. “A house called ‘Quien Sabe’——” said Alexis. “Is the house for us,” cried Olivia, aglow.
  • 53. They took it at once, without question. It wasn’t as if it were an uncertain sort of place, like “Normanhurst,” or “Sea View.” The name proclaimed frankly the certainty of venturesomeness. And Alexis Triona, sitting on the scrubby grass and sand, his back against the little veranda, the infinite sea and all the universe enveloped in still moonlight, laughed the laugh of deep happiness at their childish inspiration. He rolled, licked and lit the final cigarette. Tobacco was good. Better was this August night of velvet and diamonds. Below, the little stone groin shone like onyx. The lazy surf of ebb-tide far away on the sand of a tiny bay glimmered like the foam in fairyland. Only half the man’s consciousness allowed itself to be drenched with the beauty of the night. The other half remained alert to a voice, to a summons, to something more rare and exquisite than the silver air and murmuring sea and the shine of all the stars. A few minutes before, languorous by his side, she had been part and parcel of it all. The retreating ripple of wave had melted into the softness of her voice. Her laughing eyes had gleamed importance in the stellar system. The sweet throb of her body, as she had reclined, his arm about her, was rhythmic with the pulsation of the night. And now she had gone; gone just for a few moments; gone just for a few moments until she would divinely break the silence by the little staccato cry of his name; but, nevertheless, her transitory severance had robbed this outer world of half its beauty. He had consciously to incorporate her in order to give meaning to this wonder of amethyst and aquamarine and onyx and diamond and pearl and velvet and the infinite message of the immensities coming through the friendly silence of the moon. They had been married all of a sudden, both caught up on the wings of adventure. They were young, free as air. Why should they wait? They kept it secret, a pair of romantics. Only Blaise Olifant, summoned from Medlow, and Janet Philimore were admitted into the conspiracy, and attended the wedding. At first Olivia had twinges of conscience. As a well-conducted young woman she ought to ask her old friend, Mr. Trivett, to stand in loco parentis and give her
  • 54. away. But then there would be Mrs. Trivett and the girls to reckon with. Mr. Fenmarch, left out, might take offence. The news, too, would run through every Medlow parlour. Old John Freke, in his weekly letter to Lydia, would be sure to allude to the matter; and it was Lydia and the galley that she most desired to keep in ignorance. So they were married, by special licence, at the church in Ashley Place, one quiet, sunny morning, in the presence of Myra and the two witnesses they had convened. As they emerged into the sunshine after the ceremony, Olifant said to her: “I’ve never been so reluctant to give anything away in my life.” She asked a laughing “Why?” “Dog in the manger, I suppose.” He smiled whimsically. “I shall feel more of a bachelor than ever when I get back.” “You needn’t, unless you like.” She motioned slightly with her head towards Janet, talking to Alexis, a few feet away. “I’ve not been too busy to think of matchmaking. She’s the dearest of girls.” “But not my landlady.” Her happy laughter rippled forth, calling the others near. “He wants a law forbidding the marriage of landladies. But think of the advantage. Now you can have your landlady to stay with you —in strict propriety—if you will ask us.” “We settled that with Alexis last night,” said he. Three taxis were waiting. One for the bride and bridegroom. One, already piled with luggage, for Myra who after being fervently kissed in the vestry by Olivia, had said by way of congratulation: “Well, dearie, it’s better than being married in a Registry Office,” and had gone forth unemotionally to see that the trunks were still there. And one for Olifant and Janet. They drove to the station, to the train which was to take them on their way to the home which in their romanticism they had never troubled to see. “I’m sure it’s all right,” said Janet, who had been responsible for their taking “Quien Sabe.” “Father and I’ll be at The Point in a
  • 55. fortnight. If you don’t want to see us, tie a white satin bow on the gate and we won’t mind a bit.” For General Philimore was the happy owner of one of the little hermitages on The Point, and like a foolish old soldier lived there in holiday times, instead of letting it for the few summer weeks at the yearly rental of his London flat; so that Janet assumed the airs of an authority on The Point, and wrote stern uncompromising business letters to agents threatening them with the displeasure of the daughter of a Major-General, if a “Quien Sabe” swept, garnished, and perfectly appointed, with a charwoman, ditto, in attendance, did not receive the bridal pair. “It’s not a palace, Mr. Triona,” she said. “What has it to do with me?” he answered. “A dream nest in a cliff for this bird wife of mine is all I ask for.” Olivia’s eyes smiled on him. Why was he so different from the rest of men—even from so fine a type as Blaise Olifant? She appraised them swiftly. The soldier had not yet been sunk into the scholar. He stood erect, clean built, wearing his perfectly fitting grey suit like uniform, his armless sleeve pinned across his chest, his lip still bearing the smart little military moustache, his soft grey hat at ever so slightly a swaggering angle on his neatly cropped head. A distinguished figure, to which his long straight nose added a curious note of distinction and individuality. But all that he was you saw in a glance: the gentleman, the soldier, the man of intellect. On the other hand, there stood the marvellous man that was her husband, hiding behind the drawn boyish face God knew what memories of pain heroically conquered and God knew what visions of genius. Although he had gone to a good tailor for his blue serge suit—she had accompanied him—he had the air of wearing clothes as a concession of convention. The lithe frame beneath seemed to be impatient of their restraint. They fitted in an easy sort of way, but were dominated by his nervous eager personality. One flash of a smile illuminating eyes and thin face, one flashing gesture of hand or arm, and for ought any one knew or cared, he might be dressed in chain armour or dungaree.
  • 56. The little speech pleased her. She slipped her hand through the crook of his arm in the pride of possession. “Did you ever hear such an undomesticated pronouncement?” she laughed. “We’re going to change all that.” And the train carried them off to the great wonder and change of their lives. The train out of sight, Blaise Olifant stuck in his pocket the handkerchief he had been waving, and turned with a sigh. “I hope she’ll be happy.” “Why shouldn’t she?” asked Janet Philimore. She was a bright-cheeked, brown-eyed, brown-haired girl, with a matter-of-fact manner. “I know of no reason,” he replied. “I was expressing a hope.” He saw her to her homeward-bound omnibus and walked, somewhat moodily, on his road. After a day or two, the pleasures of London proving savourless, he returned to Medlow. But “The Towers” no longer seemed quite the same. He could not tell why. The house had lost fragrance. Meanwhile the pair had gone to the little toy home whose questioning name pointed to mystery. There were just three rooms in it, all opening on to a veranda full in sight (save for the configuration of the globe) of the African coast. On this veranda, sitting back, they lost sight of the whin-grown slope and the miniature sandy cove beneath; and their world was but a welter of sea, and its inhabitants but a few gulls, sweeping and swirling past them with a shy friendliness in their yellow eyes. In a dip of the sand-hill, just behind this elementary dwelling and communicating with it by a short covered way, stretched an old railway carriage divided into kitchen, pantry, bathroom, and bunks. “It’s the craziest place I’ve ever seen,” said Myra. “People will be living in old aeroplanes next.”
  • 57. But the very craziness of the habitation made for their selfish joy. The universe, just for these twain, had gone joyously mad. A cocky little villa made to the model of a million others would have defeated the universe’s benign intention. Nothing could be nearer to Triona’s dream nest in a cliff. Their first half-hour’s exploring, hand in hand, was that of children let loose in a fairy tale castle. “There’s only one egg-cup,” croaked Myra, surveying an exiguous row of crockery. “How many more do we want?” cried Olivia. “We can only eat one egg at a time.” They passed out and stood on the edge of their small domain, surveying the sandy beach and the seaweed and shell-encrusted groin and the limitless sea, and breathed in the soft salt wind of all the heavens sweeping through their hair and garments, and he put his arm around her and kissed her—and he laughed and said, looking into her eyes: “Sweetheart, Heaven is empty and all the angels are here.” On sunny days they lived in the sea, drying themselves on their undisturbed half-moon of beach. “Where did you learn to swim?” she asked. He hesitated for a second, casting at her one of his swift, half furtive glances. Then he replied: “In the Volga.” She laughed. “You’re always romantic. I learned at commonplace Llandudno.” “Where’s your sense of relativity, beloved?” said he. “In Central Russia one regards the coast of Wales as fantastic fairyland.” “Still, you can go to Llandudno to-morrow, if you like—taking me with you, of course; but I shall never swim in the Volga, or the Caspian Sea, or Lake Baikal, or any of those places with names that have haunted me since I was a little girl.” “One of these days we’ll go—it may be some years, but eventually Russia must have a settled Government—and we’ll still be
  • 58. young.” The sun and the hot sand on which she lay, adorable in deep red bathing kit and cap, warmed her through and through, flooding her with the sense of physical well-being. It was impossible that she should ever grow old. “It’s something to look forward to,” she said. Sometimes they hired a boat and sailed and fished. She admired his handiness and knowledge and prescience of the weather. Once, as the result of their fishing, they brought in a basket of bass and gar-fish, the latter a strange, dainty silver beast with the body of an eel and the tail of a trout and the beak of a woodcock, and in high spirits they usurped Myra’s railway-compartment kitchen, while he fried the catch for lunch. Olivia marvelled at his mastery. In spite of her sage and deliberate putting aside of the rose-coloured glasses of infatuation, in whatever aspect she viewed him, he stood supreme. From the weaving of high romance to the cooking of fish—the whole gamut of human activities—there was nothing in which he did not excel. Her trust in him was infinite. She lost herself in happiness. It took some days to arouse her to a sense of the outer world. A letter from Lydia reminded her of her friend’s pleasant ignorance. With the malice of the unregenerate feminine, she wrote: “I’m so sorry I can’t be bridesmaid as you had arranged. How can I, seeing that I am married myself? It happened all in a hurry, as the beautiful things in life do. The fuss of publicity would have spoilt it. That’s why we told nobody. This is much better than Dinard”—Sydney Rooke’s selection for the honeymoon. “I haven’t worn a hat since I’ve been here, and my way of dressing for dinner is to put on a pair of stockings; sometimes a mackintosh, for we love to dine on the veranda when it rains. It rained so hard last night that we had to fix up an umbrella to the ceiling like a chandelier to catch the water coming through the roof. So you will see that Alexis and I are perfectly happy. By the way, I’ve not told you what my name is. It is Mrs. Triona. . . .” And so on and so on at the dictate of her dancing gladness, freakishly picturing Lydia’s looks of surprise, distaste, and reprobation as she read the letter. Yet she finished graciously,
  • 59. acknowledging Lydia’s thousand kindnesses, for according to her lights Lydia had done her best to put her on the only path that could be trod by comely and well-dressed woman. She sealed up her letter and, coming out on to the veranda where Alexis was correcting the proofs of an article, told him all about it. “Don’t you think we ought to please Lydia and go to Dinard and wear wonderful clothes, and mix with fashionable folk, and have expensive meals and gamble in the Casino, and dance and do our duty as self-respecting people?” “You have but to change yourself into whatever fairy thing you like, my princess,” said he, “and I will follow you. Where you are, the world is. Where you are not, there is the blankness of before creation.” Sitting that night, with his back against the veranda, he thought of this speech of the afternoon. Formulated a bit self-consciously, it was nevertheless true. The landscape, no matter what it was, existed merely as a setting for her. Even in this jewelled wonder of moonlit sea and sky there was the gap of the central gem. He rolled and lit another cigarette—this time, surely, the very last. Why she took so long to disrobe, he never strove to conjecture. Her exquisite feminine distance from him was a conception too tremulous to be gripped with a rough hand and brutally examined. That was the lure and the delight of her, mystical, paradoxical—he could define it only vaguely as the nearness of her set in a far-off mystery. At once she was concrete and strong as the sea, and as elusive as the Will-o’-the-Wisp of his dreams. Thus the imaginative lover; the man who, by imagining fantasies to be real, had made them real; who, grasping realities, had woven round them the poet’s fantasy. And meanwhile Olivia, secure in her happiness, kept him waiting and dreaming because she had made a romantic vow to record, before going to sleep, each day’s precious happenings in a diary
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