Culpability of accounting in perpetuating the Holocaust, The

culpability of accounting in perpetuating the Holocaust, The

Lippman, Ellen J


The Holocaust was an event unprecedented in the history of man. Never before had a people been systematically and deliberately hunted and gathered, from many different countries, by one country for the sole purpose to annihilate a people. This article considers the Holocaust, specifically slave labor operations managed by German corporations and Nazi state run entities, and identifies accounting information and common financial analyses used to assist management in operation of these facilities. The article reviews the role of accountants and the information they prepared in perpetrating the injustices experienced by concentration camp victims during the Holocaust. The history of the German accounting profession and the changes to the profession during the war years are considered as a means to explain accountant behavior. Finally, the culpability of accountants for the Holocaust is considered, using slave trading literature as well as the standard of responsibility introduced during the International Military Tribunals.

Keywords: Accountant culpability; accountant responsibility; accounting history; German accounting history; German accounting profession; Holocaust; slave labor


The world has known its share of genocide – in the USSR during Stalin’s political repressions, in Cambodia by the Khmer Rouge, and in Burundi, Rwanda, Sudan, and Iraq, to name just a few of the countries that experienced genocide during the twentieth century. Each of the mass murders was country specific, where the struggle for power was confined within a country resulting in the murder of citizens of that country. In contrast, the Holocaust was an event unprecedented in the history of man. Never before had a people been systematically and deliberately hunted and gathered, from many different countries, by one country for the sole purpose to annihilate a people. This was not a disagreement of peoples within a country or even a disagreement between countries. This was an organized hatred by one country against a people who lived disbursed among many countries. Germany’s efficient organization was organized and focused to wipe Jews and other targeted groups from the earth. The implementation of the Holocaust could not have been possible without the widespread complicity of business people, lawyers, doctors, engineers, churchmen and women, public officials, military, police, as well as millions of ordinary citizens (Jones, 1999).

The research community has extensively studied the Holocaust. Previous research investigated the action and inaction by professionals during the Holocaust and considered the extent of complicity and ethical failures of the various professional groups. For example, Browning (1992) looked at the involvement of Reserve Police Battalion 101 and reported on the “extensive participation of numerous ordinary Germans in the mass murder of Jews and a high degree of voluntarism” (Browning, 1998, p.55). Browning also examined the role of German bureaucrats (1992, 1998) during the Holocaust. Glass (1997) considered the role of the medical profession in the euthanasia program that exterminated those considered unworthy, including the mentally disabled and the physically infirmed. AIy et al. (1994) described medical abuses during the Nazi regime by physicians, persons who are charged with healing, not murdering for the stated purpose of scientific research. Kipnis (1981) examined engineers and their work in designing the gas chambers that were used to execute millions of persons. While some engineers claimed ignorance of the purpose of the chambers, it was unlikely that there could be other uses for such facilities. Few researchers have examined the role accountants played in the Holocaust, and their behavior should not escape scrutiny. A book on the history of German public accounting by Markus (1997) provided a chronological examination of the German accounting profession during the twentieth century. One chapter in the book focused on the development of the profession during Hitler’s reign from 1933 until 1945, noting that the objective of accounting was to enhance the interests of the war economy. But, this research did not specifically consider how accountants or the accounting profession facilitated the extermination of a people. Funnell (1998) described how accounting assisted in the compilation of information during the war and specifically considered the use of accounting to tabulate records of the personal property of those who had been murdered.

This article extends past research in several ways. The article identifies how accounting may have facilitated the injustices experienced by the concentration camp victims. As support, the article provides common financial analysis tools and accounting information used in the slave labor operations that either failed to adequately measure the true costs of Nazi misdeeds or served as aids for decisions that contributed to the genocide. By analysis of the use and misuse of these tools, the study contributes to the understanding of accounting and its ability to inform and affect decisions, including the decision to eliminate a distinct group of people. In addition, the article extends the description of the German accounting profession by Markus (1997) by examining the profession immediately prior to and during the war years, and considering how the profession itself may have facilitated the Holocaust.

The balance of the article is organized as follows. First the article considers slave labor operations managed by private corporations and Nazi state run entities. The article then identifies accounting information and common financial analysis tools used in the management of these operations, and considers how they assisted in the management of these operations. Next, the article examines the German accounting profession in the years preceding and during the war and considers whether the state of the German accounting profession explains accountant complicity with the Holocaust. Finally, drawing upon research by accounting historians who examined accounting in the service of slavery, this article considers the culpability of accounting and accountants in perpetuating the Holocaust.

Slave labor operations

During World War II, many German corporations, including LG. Farbenindustries (IG Farben), Krupp, Union Metallendustrie, Bishmarchkhutte, Oberschlesische Hyderwerke, Siemens-Schuchert, Herman Goering Werke, and Volkswagen, manufactured items using the labor of prison slaves. The laborers included Jewish workers transported from their home states to various concentration camps maintained by the Nazis, and local workers from the countries in which the camps were located (Gutman & Berenbaum, 1994; Allen, 2002). The workers were employed in facilities owned by the corporations and in facilities built within the concentration camp compounds.

German corporations willingly made use of the cheap slave labor. The historian Mark Spoerer examined 33 known case histories of companies that employed concentration camp slave labor and found only one case where evidence exists that the state “forced a firm to use slavery against its will” (Allen, 2002, p. 170). Moreover, often the German business leaders negotiated partnerships with the Schutzstaffel (SS), an important client during the war years. IG Farben, a leading manufacturer of explosives, light metals, and chemical warfare agents, began using slave labor in 1941. The company used 10,000 persons as slave laborers in 1941 and increased its reliance on slave labor to approximately 100,000 persons by 1945, with an additional 100,000 foreigners and prisoners of war (TriaL· of War Criminals, 1953, p.54). Krupp, a company that manufactured armaments and tanks, made extensive use of slave labor, both inside its own plants and in plants established inside the concentration camps. As early as 1942, Krupp used slave labor in its own plants, and by 1943 it had established a manufacturing plant inside the Auschwitz concentration camp where concentration camp laborers made parts for automatic weapons. Although exact measurements do not exist, estimates of prison labor usage by Krupp range from a low of 75,000 slave workers to a high of 100,000 slave workers in Germany alone (TriaL· of War Criminals, 1950b, p.115).

State owned and operated enterprises also made extensive use of slave labor. The entire slave labor operation was run by a small group of engineers, accountants, and managers who worked in the SS Wirtschaftsverwaltungshauptamt (Business Administration Main Office, and referred to as the WVHA). The WVHA controlled many economic enterprises that used concentration camp labor for the German state and supplied slave labor to private corporations. German corporations negotiated slave labor contracts with the WVHA, and these contracts specified both the lease payment for the slave laborers and the provisions to be provided to them. Unlike ancient slaves who were provided with adequate food and housing as a means to protect their value, German corporations and state controlled enterprises provided little to protect the concentration camp slaves. For example, Krupp provided each of its slave laborers one blanket, one set of eating utensils, one drinking cup, and food costing 70 pfennig per day (approximately 18 cents) (Mühlen, 1959, p.168). In a 1941 meeting, IG Farben negotiated a contract with the SS to pay between 1.5 and 3 Reichsmarks (RM) per day for each worker leased, with the price dependent upon the age and skill of the worker (Borkin, 1978, p.117). This price was discounted from that paid to a free worker, as IG Farben management anticipated that the condition of concentration camp inmates would hinder their efficiency, making them only a third as efficient when compared to free workers (Borkin, 1978).

Yet, even with the built-in inefficiency of the slave laborers, use of these workers yielded extraordinary returns to investors. Neither state owned and operated entities nor corporations maintained reasonable working conditions,1 considered the health of the laborers, provided protective clothing, or accrued for future pensions to slave laborers2 – conditions that were required for civilian workers (Gutman & Berenbaum, 1994). Thus, unusually large returns were earned by these corporations. “Slave labor did not satisfy any deep aggressive instincts” of the corporations; rather “it satisfied the shareholders” (Wertham, 1978, p.21).

Accounting for operations and slave labor

Employment of slave laborers was big business (in 1942, revenue to the SS from the lease of slave laborers totaled 13.2m RM [Black, 2001, p.362]), and corporations and Nazi enterprises alike used sophisticated accounting techniques to track the results. Oswald Pohl, head of the SS Business Administration Main Office, the division responsible for the extensive slave labor operations, “molded informal and amateurish accounting practices into a standardized, homogeneous system so that the SS could stand up to public audit” (Allen, 2002, p.27). IG Farben’s accounting system provided board members with reports detailing company labor usage, with slave labor reported separately from other labor (Borkin, 1978). The Gustloff Works, formerly a Jewish owned business called the Suhler Weapons and Vehicle Works until it was taken over by the Nazis in 1935 (Allen, 2002), maintained reports that cataloged each prisoner’s output (Hacket, 1995). A textile and garment works called The Textile and Leather Utilization GmbH (TexLed), founded by the SS, employed “sophisticated technical management in slave-labor supervision” (Allen, 2002, p.73) that tracked production statistics including “unit costs, labor costs, and depreciation rates on machinery and combined aggregate statistics to yield calculations of production minutes per unit product and unit labor costs” (Allen, 2002, p.73). TexLed maintained steady production with its employ of unskilled women of Ravensbriick, a women’s concentration camp. Although TexLed was an SS entity that used slave labor, it was a viable factory operation run by competent management generating real profits estimated at 18 percent (Allen, 2002, p.78), and “achieved productivity rates close to those of civilian workers” (Allen, 2002, p.74).

To prepare financial statements of SS businesses that used the free prison labor, the SS needed to determine an appropriate wage scale to assign to prison labor. The SS determined a standard wage rate, as any good cost accounting system would do “on the basis of the elaborated system … to establish labor costs. Thus the norm wage for the Jewish prisoners employed can be exactly accounted for on the plant account sheet, with the daily average rate serving a basis” (Trials of War Criminals, 1950a, p.585). This enabled the preparation of a profit and loss statement “from the employment of Jewish prisoners” (Trials of War Criminals, 1950a, p.586). As an example of information produced that tracked revenues and labor costs, an income statement from Buchenwald, a German prison camp in existence between 1937 until its liberation in 1945, is reproduced in Figure I.3 (Figure 2 contains the original statement in German.) This statement reports the estimated net profits to the SS from the leasing of a single prisoner. At the top of the statement, the estimated net revenue per prisoner per day is presented. Next, expenses related to leasing prisoners and including estimates for food and clothing amortization are presented. An estimate for the expected number of working days for the prisoner appears next. Prisoners were expected to work 30 days each month with no apparent time off for vacation or weekend rests. The statement then estimated the revenue for only nine months per laborer. This was not because the laborer was reassigned after the nine-month period. Rather, nine months was the life expectancy of the prison laborer, the result of the harsh working conditions and insufficient food allotment (Ferencz, 1979; Rubenstein & Roth, 1987).

Even death through labor was a measured financial decision, as extermination of potentially employable prisoners in gas chambers would deprive the Reich of revenue from the lease program. A significant revenue stream could be generated by allowing the prisoners to work until they died from exhaustion or starvation (Black, 2001). Upon death, the prisoner still generated profit. The income statement included an estimate of revenue at death from the value of the deceased’s personal clothing, valuables, currency, gold extracted from the teeth of the deceased, and sales of hair, fat (for soap) and ashes for fertilizer (Shirer, 1960; Feig, 1981), less the cost of cremation that averaged two marks per person (Kogon, 1950). This operating statement included standard accounting concepts, such as estimates on life expectancy used today in determining post retirement benefits, and amortization, used to report the systematic expensing of intangible assets. The income statement also included information quite foreign to income statements today – the explicit limited life expectancy of prison laborers due to harsh working conditions. Estimating the useful life of the slave laborers at nine months is an accounting procedure that ignored the value of life. As Funnell (1998) argued in his Holocaust research and as Fleischman and Tyson (2004) stated in their research on slavery, accounting can reduce individuals to numbers to “render the human side invisible” (Fleischman & Tyson, 2004, p.383), masking the suffering of the victims who were worked to death.

Cost-benefit analysis represents another common financial tool used to support decision-making. In Nazi Germany, accountants used a cost-benefit analysis to compare the cost of killing children with gas and then burning their bodies, to the alternative of burning the children to death (Greenberg, 1975). Both options required an expenditure for burning, but the second option would use less gas, thereby reducing the costs. Gas cost 975 RM for 195 kilos. For every 1,500 persons gassed, approximately 5.5 kilos were required. By not gassing the children first, the state could save 10 cents per child (Fleischner, 1977). Gassing was by no means humane. Often prisoners believed the gas chambers were showers, and they panicked once they realized the truth. While gassing was painful, the pain from being burned alive was certainly worse. Nonetheless, the Nazis elected to burn the children alive, and their screams could be heard throughout the camp (Fleischner, 1977).

As the extermination efforts continued, gas supplies decreased. In response, the Nazis elected to decrease the amount of gas used for each killing, which prolonged the time to death increasing the suffering of the prisoners as they died (Fleischner, 1977). Time for the onset of death increased from an average range of three to seven minutes of gas time, to an average range of 15 to 20 minutes (Greenberg, 1975). The Nazis’ decision to reduce the amount of gas used for killing appears motivated by economic consideration. In this analysis, the Nazis considered the costs of killing but did not consider the cost of human suffering associated with the killing method or the individual human lives lost. A well-prepared cost-benefit analysis may be mathematically correct; however, it is not value neutral. Personally held values affect the information prepared, and, depending upon the values embedded in the task, the analysis may be flawed even when the computations are accurate. Such was the case in the cost-benefit analysis used to support decisions about gassing the children to death.

One information system used during the Holocaust identified the flow of laborers and the supervision of production (Allen, 2002). As part of this information system, the category “unfit” was used to distinguish prisoners who were fit to work from those incapacitated. This later category “became a standard tool for the systematic liquidation of prisoners” (Allen, 2002, p.124).

While accounting information may have masked some of the horrors of Nazi Germany, accountants preparing the information must have been aware of the operations. The information prepared by accountants was not limited to that expected during war – costs of prisoner of war camps or conventional weapons. Rather, accounting information detailed the concentration work camps and extermination costs of prisoners, war costs unique to Germany. In certain circumstances, the accountants at individual factories were Jews required to record the transactions (TriaL· of War Criminals, 1950a). But, as the Jewish bookkeepers were exterminated, German accountants took their place. Some recorded transactions, and others performed audits of the factory results. “I have examined the entries of the capital accounts and found these to be in order” (Trials of War Criminals, 1950a, p.520). And, the accountants doing this work, while sometimes SS officers, were often civilians (TriaL· of War CriminaL·, 1950a). Surely they understood the magnitude of what they reported. For instance, Dr. Max Horn, a university educated accountant and SS officer assigned to Globocnik’s industries, noted mistreatment of the prison laborers and the resultant negative impact on production. He identified starvation as the key problem with low production and protested the conditions. Horn stated “if the SS wished to exploit prisoners, some modicum of preservation of life had to take precedence over the denigration of the work Jews, and – with the genocide in full swing – over their wholesale murder” (cited in Allen, 2002, p.248). It is impossible to know with certainty the true motive for Horn’s protests, but it is doubtful that a humanitarian motive existed. Horn was the “business manager” (TriaL· of War Criminals, 1950a, p.513) for OSTI, SS run factories that used Jewish labor. Without a labor force, he could not maintain his factories; thus it was in his best interest to maintain a healthy workforce. And, in November 1943 when OSTI was deprived of Jewish workers, Horn was placed in-charge of liquidating the factories.

Accountants, whether they worked directly for the state or for private corporations that leased slave labor from the state, were aware of the slave labor operations and likely had access to information about these operations and the mistreatment of the workers. Although accountants were not directly responsible for the killing, they have been called “desk-killers” for issuing reports that detailed the killing machine (Rosenberg & Marcus, 1988, p.213). But, rather than apply a sweeping blame to accountants as killers and accomplices, this article considers the profession of accountancy during this time and the potential impact of the professional accounting organization upon accountants’ actions during the Holocaust.

Accountancy profession in Germany

In countries influenced by Anglo-American interests, professionalism in accounting was driven by the accountants, as personal status was achieved through professional classification. Prior to 1931, German accountants felt no compelling need to establish themselves as a profession. Instead, their status was obtained through education (Evans, 2003). Official professional status was conferred upon German accountants when, in 1931, the German government required statutory audits of firms with a stated capital in excess of 3,000,000 RM. By the following year, such audits were required for companies with capital of at least 500,000 RM. The audits were to be prepared by publicly commissioned accountants.

When the German government introduced the requirement that mandated statutory audits, Germany was in the midst of economic and political turmoil, still recovering from the loss in World War I (WWI). The country required significant capital investment as part of its recovery plan. But, foreign investors would not accept the audits of German corporations that were performed by German accountants. It was hoped that a newly established accounting society would introduce professionalism to accounting and increase foreign acceptance of German audits. In countries including the USA, Canada, England, and Scotland, organization of an accounting society entailed struggles between competing organizations and interests; in Germany the accounting society was created by the government, thereby short-circuiting struggles between competing groups. Germany could not afford the time for the various competing accounting organizations to resolve their differences within the private sector, as was done in other countries. Rather, Germany intervened, establishing the professional accountant, the publicly commissioned Wirtschaftsprüfer, and the accounting society Institut der Wirtschaftsprüfer (IdW) (Meisel, 1992).

The IdW was formed by the merger of various organizations including those of consulting economists, academic experts, small accounting organizations whose members lacked graduate degrees, highly qualified graduate members, associations providing bookkeeping services, trust and audit companies, and other associations, into one organization that became a comprehensive, self-contained professional organization of accountants. The IdW provided standardized protocols, uniform authorization, and testing for publicly commissioned accountants, called Wirtschaftsprüfers (WPs), within the unified German state. To become certified as a WP, applicants needed to meet various requirements including German residency, an orderly financial and personal life, a minimum age of 30 years, six years of professional practice including at least three years of auditing, successful completion of a written exam, and demonstrated knowledge of the accounting discipline (Meisel, 1992, p.191). While the certified accountants were to be commissioned only after passing an exam, a transition period from 1931 through 1935 existed when candidates with relevant experience and personal aptitude could become certified without testing (Meisel, 1992, p. 186). With these requirements, the profession of accountancy was elevated from discrete specialties into a new profession that had a monopoly on the examination of public entities and possessed credibility throughout the country.

Initially, the profession set goals to establish laws of professional practice, form a discipline newspaper, provide professional assurance duties, and work with related professionals. But, the IdW had not yet begun to consider ethical questions of professional practice, and the organization itself was only in its infancy when Hitler was appointed Chancellor of Reich in January 1933.

In national elections held on 5 March 1933, the National Socialists received 43.9 percent of the vote. By 23 March 1933, Hitler had obtained the majority of support from the other parties, and the government passed the Enabling Law (Ermachtigungsgesetz), which permitted dictatorial power by the National Socialists. Thus began the systematic dehumanization and persecution of Jews. As Germany began to change under Hitler’s leadership, so did the IdW. A general meeting of the IdW membership held February 1933 became the last meeting of this organization until after the war, as the IdW would lose its independence in the intervening years. An advisory counsel of the IdW continued to meet, and on 4 April 1933 the council expressed support for the National Socialist government. Two of the Jewish members of the council, previously elected at the February 1933 meeting, were asked to resign. Beginning 6 April 1933, Jews could no longer serve as authoritative tax representatives (Meisel, 1992).

In September 1934 the IdW changed its statutes and adapted the profession to the National Socialist principles of “Führerprinzip”, the Institute of the Führer. The IdW became a professional accounting organization administered by loyal party members. Candidates and other professionals were required to produce proof of their Aryan heritage. A party member became the “führer” of the IdW, and administrative functions were given to a non- WP party member, Dr Otto Mönckmeier (Meisel, 1992).

The National Socialist government prohibited Jews and others not friendly to the new regime from working as approved auditors, although exceptions were made for Jewish veterans of WWI or those Jews whose father or son was killed during WWI. The National Socialists reaffirmed the need for WPs but believed that the profession would best be served by the government’s oversight rather than the oversight by an independent professional organization. As stated in June 1934 by Dr Elmar Michel, a representative of the Reich’s Economic Minister, “Although not an official invested with the power of the state, the WP has become in a certain sense the executor of a state function . . . Due to the importance of the WP’s work, assigned to it by legislation, it stands to reason that state’s management must influence decisively the management of the profession” (Meisel, 1992, p.211).

With the adoption of Führerprinzip, democratic processes in the IdW had essentially ended as the IdW lost its independence as well as its function as an independent representative of accountants’ professional interests (Meisel, 1992). Thus, the IdW had become an instrument of the state, and the self-governing accounting societies of each province in Germany were either assimilated or dissolved. Members acquiesced to the changes to its statutes when the entire membership approved, by a vote of 612 to 0 with two abstentions, the adoption of ???Gef?????. At the time of the vote, 55 Jews were members of the IdW (Markus, 1997, p.78).They, therefore, either did not vote, abstained, or voted with the majority to essentially limit their own rights. While only 38 percent of the membership of the IdW were then members of the National Socialist party, nonetheless the members did not object as the National Socialists began to assume control of the organization.

The hope was expressed that no additional Jews were to be admitted to the IdW, although six additional Jews were admitted (five in Berlin and one from Munich) all veterans of WWI (Markus, 1997, p.5). And, in November 1938, three days before Kristallnacht and the burning of Jewish businesses and homes, and the arrest of thousands of Jews, the remaining 28 Jewish IdW members (others having dropped their membership or emigrated) had their membership revoked (Markus, 1997, p.250).

With the transfer of oversight to the government came a shift in the focus of the WP. Previously, the auditor’s responsibilities addressed the needs of the corporation for which it worked and the public for which it audited. With the introduction of government intervention, auditing became a mechanism to force advancements for the public’s good (Meisel, 1992), and auditors became beholden to the interest of the public economy.

The focus of the auditors changed again in 1937 when an oath of allegiance to Hitler was added to WPs’ certification requirements. The original oath – “I swear that I will fulfill the duties and obligation of a publicly commissioned accountant knowledgeably and impartially and that I will fulfill them with the desired expert opinion knowledgeably and impartially” (Meisel, 1992, p.186) – was amended to read “I swear by God that I will exercise absolute obedience to the Führer and Reichs-Chancellor Adolf Hitler and that I will carry out my duties and responsibilities of a publicly appointed Wirtschaftsprüfer conscientiously and impartially, that I will preserve professional secrecy and that all reports requested of me will be prepared conscientiously and impartially” (Markus, 1997, p.89). Thus, in 1937 WPs became primarily responsible to Hitler and began carrying out the policies of the Nazi party.

Under the leadership of Mönckmeier, the IdW used its official accounting magazine to educate accountants about specific rules that discriminated against Jews. For instance, in 1939 the official accounting magazine outlined directives about Nazi regulations required of WPs in their interactions with Jews in business (Der Wirtschaftstreuhänder, Zeitschrift für duetches Prüfungs- and Treuhandswesen, Dr Otto Mönckmeier, editor, 1939). Accountants were forbidden from offering professional advice to Jews without expressed official permission in writing from appropriate Nazi officials. When representing Jews, accountants were to work for the good of the Party over the personal benefit of a Jewish client. Business laws requiring dissolution of Jewish businesses were detailed in the magazine. Among the laws described was a law ordering Jewish businesses to sell or liquidate within an appointed time period as part of the process of Aryanization of Jewish companies (Reich Law Sheet Register RGBI, 1, 1938, cited in Genschel, 1966). The 12 March 1938 article by Dr H. Adler on New Business Laws in the accounting magazine describes this new order and the additional business for accountants who will be appointed as attestors of value in the dissolution of the Jewish businesses (Adler, 1939). But the law also required the Jewish business owners to bear the cost of the audits. Thus, discrimination within Germany had become further institutionalized, and the WPs, the German accountants, were actively engaged in the formation and implementation of the laws that discriminated against Jews.

The IdW relinquished its autonomy to the National Socialist party without significant dissent. One possible explanation for the IdW’s ready acceptance of Hitler’s regime relates to the accounting organization itself The IdW was a new organization; it did not have a professional history upon which to rely. Indeed, the profession was still learning what professionalism meant. For instance, in 1933 the advisory committee to the IdW reported unsatisfactory performance of WPs, questioning whether additional, specific supplemental discipline tests of competence should be implemented (Meisel, 1992). The IdW did not have the fully developed loyalty of members that comes only with long-lived organizations. WPs could easily give up what they did not yet value. Additionally, consideration of ethical responsibilities of accountants had not become a part of accounting competency in Germany.

Accounting professionals from the international community appeared to show support for Germany’s accounting body, even after the Nazis took office. The Fifth International Congress on Accounting was held in Germany in 1938 and enrollment of foreign representatives to the conference, while below the 500 expected, still totaled 315 foreign participants (Markus, 1997, p.106) from 33 countries (Walker, 2000, p.232), with the largest number of foreign delegates from Britain. Walker argues that British delegates attended this conference, despite widespread knowledge of persecution of the Jews, in order to protect their business interests and the British chartered accountants who were already working in Germany.4 After the conference, accounting articles that appeared in the journal The Accounting Review praised Germany and its efficient accounting methodology (Matz, 1938, 1940). The publication of Standardized Accountancy in Germany (1943) in England during the war also touted Germany’s regulatory system of standardized accounting, a result of the German “talent for organization” (Singer, 1943, p.10). Singer stated that the accounting system aided the Germans in accounting for its war economy.

In other countries such as the USA, Great Britain, and Canada where selfimposed professionalism required a more active participation and where individual rights of citizens were paramount, accountants may have more actively opposed the takeover of their accounting society by the State. But in Germany the view of State as guide was prevalent throughout society, where German communal responsibility was the primary focus, and individual rights were secondary to societal goals. “German individualism, tempered by a strong nationalistic and paternalistic tradition, enjoined everyone to work for the communal good” (Harston, 1993, p.148). Accepting current conditions for the good of the society was the norm. German accounting emphasized compliance with laws and regulations and not representational faithfulness. Moreover, secrecy in the financial transactions was preferred over financial disclosure. These characteristics would, therefore, set a tone in financial reporting that discouraged the questioning of State actions, particularly since the State was the ultimate client as opposed to the corporation (Neal & Morgan, 2002). It was State policy, as articulated by Heydrich and first made public at the Wannsee Conference, to use slave laborers, to under-provide for the workers, to work some concentration camp inmates to death, and to kill the remaining others who did not die working (Shirer, 1960, p.965).

Although little evidence exists that accountants, as a group, formally questioned the new management of the IdW, there exists evidence of individual efforts to resist the dictates of the government. For instance, Dr Elmar Michel, a civil servant in the Ministry of Economics, continually clashed with Mönckmeier, pushing for the continued independence of the IdW from the government and the protection of Jewish members. In 1937, when Mönckmeier moved to exclude persons with Jewish mothers or wives from membership in the IdW, Michel intervened (Markus, 1997).

Other accountants resisted the changes of Führerprinzip as well. In 1933 six members of the Der Verband Deutscher Bucherrevisoren (VDB) (Association of German Auditors), one of the founding groups of the IdW, were reprimanded for criticizing the new leadership (Markus, 1997, p.69). Of the 1,100 members of the VDB in April 1933, 74 resigned by January 1934. In 1942, a professional accounting disciplinary committee reprimanded an accountant for using language considered too respectful when corresponding with Jewish clients (Markus, 1997). In another instance, one accountant protested when the Nazis took over the management of a previously Jewish-owned business for which she worked. She quit her job stating that “she’d rather die” than work for the Nazis (Jones, 1999, p.219). She was not punished for her comments or actions, although her later active resistance led to her death.

It is likely that other accountants performed individual, undocumented efforts of resistance related to their work with the Nazis. But, state- wide, WPs were not active in opposing the changes in the IdW. Within only a few years after Hitler came to power, the accounting organization had ceased acting as an independent board to which concerned accountants could look for guidance. WPs were to serve the state, and if accountants disagreed with the state, they had no professional recourse, as their organization was controlled by the state. Thus, accountants, individually, needed to have the moral courage to resist. And, if they did not (as most did not) were they culpable in perpetrating the genocide through their accounting of the slave operations?

Culpability of accountants and accounting

Researchers have suggested that accounting supports illegal or immoral activities of institutions. For example, Fleischman and Tyson (2004, p.393) examined the use of accounting on slave plantations in the antebellum south and concluded that “accounting is far more complicit in sustaining slavery and its institutions than many other accounting scholars or historians have acknowledged”. Funnell examined the use of accounting during the war and stated that “accounting provided the state [Nazi Germany] with what appeared to be a neutral and more importantly disinterested technology of accountability which allowed the state to characterize its actions to those who participated in the killing process as nothing more than a technical process” (Funnell, 1998, p.458). In slave trading, accounting commodified and objectified human lives by converting human attributes into categories of age, sex and color, which were then used to assign monetary values to the slaves. These monetary values facilitated the slave trading while also ignoring the human dimensions of slavery or even masking the degree to which atrocities occurred (Oldroyd et al, 2005). Likewise, during the Holocaust, accounting reports did not convey the human dimension of the victims. In cost-benefit analyses, in operating statements, and in worker efficiency computations, the human cost from the policies of the Holocaust was ignored in the accounting data.

Accounting information does not exist independent of persons engaged in generating that information or persons using that information for immoral or illegal acts. Fleischman, Oldroyd and Tyson (2004) argued that accountants should be held accountable for the misdeeds of slave owners due to the severity of the slave mistreatment. They stated that a basic standard of justice exists for the “treatment of humans against which accounting and accounting practitioners can be judged culpable” (Oldroyd et al, 2005, p.5). Fleischman, Tyson and Oldroyd (2004) argued that accountants “were contributing to genocide in the sense that slavery, with its high mortality rates, created a perilous demographic situation, and thus it is legitimate to adjudge its collaborators guilty of crimes against humanity” (Fleischman, Tyson & Oldroyd, 2004, p.5). The authors held the accountants responsible for the consequences of slavery despite the widespread use of slavery during that period. Using this standard of justice, German accountants would likewise be held responsible for the consequences of their information despite Germany’s wide usage of slave labor.

Oldroyd et al. (2005) considered whether accountants are culpable for the support of slavery in the absence of a professional organization and code of professional ethics to guide accountants’ behavior. The authors argued that legality provides a framework for professional ethics in accounting. Since slavery was legal in the British Empire until 1834 and in the USA until 1863, “involvement in slavery would not have been judged professionally unethical by the standards of today, had an organized profession existed” (Oldroyd et al., 2005, p.lO). In Germany, an independent professional accounting organization did exist but was only in its infancy, having been created in 1933. It did not have a professional code of conduct, and by 1934 it had lost its independence and become state controlled. Thus, accountants neither had a formalized code of ethics to govern their behavior nor an organization to turn to for independent, professional advice. Other than personally held values, accountants could only rely on the laws of the country for guidance. Since discrimination, slave labor, and annihilation were state authorized, under the argument of Oldroyd et al. accountants would not be culpable. But, these behaviors were clearly illegal in other western countries and did not conform to laws or values held in Germany either prior to or after the Holocaust. Because genocide, slavery, and discrimination were unacceptable in the western world yet widely practised in Germany, it is unclear whether complicit German accountants would be culpable under the terms of Oldroyd’s standard.

In the International Military Tribunal Trials held after the war, lower and senior-level accountants were tried for crimes against humanity. Many high-level SS accountants of the Holocaust acknowledged what they did but argued that their actions were not wrong. These individuals believed they were acting within the bounds of acceptable behavior at the time and felt no additional responsibility for moral reflection (Krens, 1988). Additionally, some felt they were made a scapegoat for others’ transgressions. “Men like Himmler, Gluecks . . . these men are dead and I believe that I can say that if this dozen men would be sitting here in the defendants’ dock today, then the bookkeepers of Amtsgruppe A would not be sitting in the first row of the defendants’ dock” (Trials of War Criminals, 1950a, p.761).

In the Tribunal’s rulings, the court differentiated accountants’ responsibility for the Holocaust dependent upon the ability of the accountant to effect change or change jobs. The court convicted Dr Hans Hohberg, the top SS accountant, of crimes of war and crimes against humanity and sentenced him to 10 years imprisonment (History of the UN War Crimes Commission and the Development of the Laws of War, 1948, p.530). Due to Hohberg’s high level of responsibility, the court held him responsible for the information he, and those who reported to him, produced. But, lower level accountants were not held culpable for the genocide. Even some higher level accountants were exonerated if their level of knowledge was remote or if their association with the concentration camps was only sporadic. However, those who directed accountants, who had information about the killing learned from the preparation of financial information, and who were in a position to effect change or find an alternative job were held responsible for the information they helped prepare and were convicted of crimes against humanity (TriaLs of War Criminals, 1950a).

The Tribunal introduced a new standard for accountant responsibility. This standard, holding accountants culpable if in a position to effect change or if possessing the ability to change employment, might be a standard that can be more fully developed and incorporated into today’s professional code of ethics. The standard used at the Tribunal acknowledges the responsibility of accountants, while also acknowledging that certain circumstances may make decisive action by accountants difficult. “Mere knowledge of crime without the power to interfere carries no moral or legal condemnation. But knowledge of crime and participation in the system that makes that crime possible dissipates the concept of unblemished innocence” (Trials of War Criminals, 1950a, p.1159).

Implications for future consideration

The Holocaust represents an unprecedented genocide against a people simply because of race. Past researchers have implicated a number of professional groups for their complicity and their ethical failures during the Holocaust. This article considered the failure of accountants and the professional accounting organization to respond to the Holocaust. Neither accounting nor accountants initiated the Holocaust. Yet, accounting practices involved in the slave labor operations contributed to the genocide, as the accounting information disregarded basic human rights of the laborers. In fact, the slave laborers were not treated even as productive assets. Rather, in most cases, these humans were treated as commodities to be used up in the production process.

This article applied the theories on accounting culpability in slave trading to Nazi Germany and considered whether accountants were culpable in perpetuating the Holocaust. The article provided examples of analyses prepared by accountants that were used to inform and facilitate decision-making during the genocide. However, the motivation of the accountants to disregard the value of human life when preparing the analyses was not fully explored. Why did individuals choose to ignore the information and the implications of that information? Was the German accounting profession’s emphasis on professional competence rather than moral considerations responsible for the behavior of accountants who prepared and used accounting information to support the elimination of the Jews? Future research could examine accountants’ behavior during the war years to better understand their apparent lack of resistance, either individually or collectively, to the SS’s final solution.

Few accountants today prepare accounting information detailing atrocities on the scale of that in Germany. And few accountants are confronted with a state government that has as its key strategy the elimination of a race of people. Perhaps a strong and independent German accounting profession would have positively affected accountants’ response to the Holocaust. But, then, the accounting profession was only beginning to develop. Consideration of ethical issues was not a skill mandated for prospective WPs. Test questions on the WP exam did not include any ethical issues (Meisel, 1992), and the certifying board’s qualifying personal characteristic only required that candidates lead an orderly life, personally and financially. Today, ethics are a focus of professional certifying organizations. A strong code of ethics and an equally strong accounting professional organization that takes an active role in managing accountant work may provide a moderating influence to illegal or immoral pressures. Future research should consider the importance of accounting societies and codes of ethics for ensuring ethical behaviors of accountants. Similarly, consideration should be given to virtue ethics, its influence on professional codes of ethics and the resulting influence in guiding professional behavior, both for normal ordinary transactions and for those extraordinary transactions witnessed in the Holocaust.

Finally, further development of the International Tribunal’s standard for accountant responsibility should be considered. In this way, individually and collectively, accountants can begin to understand their own culpability for the consequences of the information they provide. As evident in this article, accounting information can have severe ramifications, and accountant responsibility for such information may change the way accountants work and ultimately the decisions made.


1. Prison laborers endured horrendous working conditions. They slept in crowded quarters on hard floors. No clothes were issued (Shirer, 1960). They were not permitted to converse during working hours (Borkin, 1978). Prisoners worked from dawn to dusk, seven days a week.

2. Recently corporations have acknowledged their financial and moral obligations to slave laborers.

3. The primary source for this financial statement is Eugen Kogon, an Austrian imprisoned by the Nazis from 1938 until his liberation, by the Allies, in April 1945. Kogon was then enlisted to help prepare a report for the Supreme Headquarters, Allied Expeditionary Forces that would detail the operations of a concentration camp. The 450-page report, finished one month later in May 1945, became the basis for Kogon’s book, originally written in German and then translated into English. Of me financial statement, Kogon writes, “Let it not be thought that this calculation is my own handiwork. It comes from SS sources” (Kogon, 1950, p.269).

4. Despite these efforts, British accountants were asked to leave Germany by 1939 (Markus, 1997).


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Acknowledgements: The authors gratefully acknowledge the research assistance provided by Donald Beebe, who translated key references from German into English. We acknowledge and appreciate the input of attendees at the 10th World Congress of Accounting Historians in August 2004, especially Thomas N. Tyson, two anonymous reviewers for Accounting History, and Judith W Kay.

Ellen J. Lippman

University of Portland

Paula A. Wilson

University of Puget Sound

Addresses for correspondence: Ellen J. Lippman, PhD, CPA, Associate professor, University of Portland, Dr. Robert B. Pamplin School of Business Administration, 5000 N. Willamette Blvd, Portland, OR, 97203 USA. E-mail:; Paula A. Wilson, PhD, CPA Associate Professor, University of Puget Sound, School of Business and Leadership, 1500 N.Warner St. # 1032,Tacoma, WA 98416-1032, USA. E-mail:

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