Would you like your staff to learn more about IFRS?
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After posting my commentary on FAS 157, which took more time to put together than I'm willing to admit, I resumed reading The End of Poverty, by the Jeffrey Sachs. I just finished the chapters about his experiences in helping Poland and Bolivia end hyperinflation and transform their economies. Of lessons learned from these experiences, he writes:
“…I learned once again about the importance of a basic guiding concept for broad-based economic transformation, a concept powerful enough to frame the great debates in a society and give guidance to millions of individuals about the changes ahead.” (p. 129).
I found this statement to be particularly apropos to the place we find ourselves post Enron and SOX, and on the cusp of plunging into IFRS. A broad-based transformation of accounting is very much needed, but the changes thus far in reaction to the calamities of five years ago bear little relation to Sachs' recipe for successful transformation. Where is the ennunciation of basic principles that can transform accounting from a patchwork of compromises created only to pacify special interests--and ripe for abuse?
Principles-based accounting is the only acceptable answer, but neither the SEC, FASB nor the IASB appear to be particularly motivated to do much more than pay lip service to the mere idea of principles, much less set them down on paper.
Ah, well, it's only accounting. At least they're not the ones in charge of finding a cure for poverty.
Would you like your staff to learn more about IFRS?
Click here for a sample in-house training agenda!
When I was a wee little accountant, about 33 years ago, I was idealistic enough to favor principles-based accounting. I no longer do because I have become cynical and hardened with age. Any principle will be subverted by the Big Four (BF) and its sympathizers. See a recent article at www.telegraph.co.uk about the BF looking for cover from Britain's FSA, for example. For decades I have prefered rules-based accounting, recognizing all of its deficiencies, because it is less liable to manipulation.
Posted by: George Weinbaum | December 10, 2007 at 07:43 PM