Accountants must rebrand themselves
Jacob Soll,20July 2016
Professor Jacob Soll delves into the profession’s past and makes the case for why accountants must rebrand themselves as accounting leaders.
Accountants are at the front line of every major issue,from the Greek debt crisis and the decline of the Chinese stock market to income inequality and the growing risks of unpayable pensions and off-shore banking.From the great crash of 2008to the ongoing European debt crisis and,indeed,to the simmering public finance crises in the US and China and the enormous debates about income inequality,it’s hard to think of a leading voice from accounting in government debate,in the press,or on television –from sensationalist news to the BBC.
To the public,accountants have been all but invisible.Financial experts know the roles accountants play,from their difficult tasks as auditors to standard setters in government and also professionally,such as that of ICAEW.But to the outside world,even to those in business,politics and education,accountants do not have the reputation of being public leaders.
Given the central role accountants play in managing almost all institutions,and,indeed,the wealth of huge swathes of individuals,it’s fair to say that this image problem is something of a crisis for the profession.Readers of this magazine might disagree,but consider this –for obvious reasons,this poses an enormous problem,for when they wield their skills with prudence,accountants are the most qualified to present and analyse financial data.They can analyse and explain financial information and help understand the stakes of questions that involve valuation of assets and liabilities.The press,politicians and citizens groups use terms like public debt without any understanding of how public debt works.And it’s always staggering to hear on the news,“And now,for the numbers”,only to hear a few stock market figures.
“If the profession is to survive the coming onslaught of digital,AI-driven accounting,then it must make its case professionally,morally and culturally.”
These are not the most important numbers.The real numbers are accrual accounting numbers,and we almost never hear them.If we were to talk about the numbers in say,California,in real accounting terms,it would be more than disconcerting as accrual accounting seems to play no role in calculating state finance.Without serious accountants,public debt is dangerously forgotten or misrepresented and the risks posed by certain standards on the private balance sheets of zombie banks and companies are reasons that in the US,Greece and Germany,as well as China and many other countries,economies are in disarray and public trust has evaporated.
In short,this means that part of our ongoing cascade of economic crises –and they are not stopping any time soon –is related to our inability to have serious,effective public discussions about how to account for both private and public finance.I’m sure that readers of economia would agree on this score.What I believe,and what the data from my research shows,is that this problem is related to the lack of visibility of accountants in political and public life.We might be used to this situation,but it was not always so.
The founder of Price Waterhouse in the US,Arthur Lowes Dickinson,was both an accounting leader and a public figure.The model of a gentleman accountant,Dickinson was knighted by George V in 1919after going to Britain to work in the London office of Price Waterhouse &Co.,and then for the British government during the First World War.Dickinson saw the accountant as impartial referee between business and government,dedicated to numbers and order.
It was a stance not always easy to maintain,particularly in the rough and tumble of the New World.Dickinson found American business unpredictable,fast-paced and unregulated.“Annual audits which in England are always the backbone of a business are few in number,”he complained,“and the largest of them being dependent on the caprice of a few individuals cannot be considered certain.”
Dickinson soon discovered that American clients did not know “good from bad”audits.But he wanted a British model.He did not think that accountants should focus on how to run businesses but that,first and foremost,they should focus on producing a “bare statement of facts”.Dickinson made it his quest to provide the finest audits possible.
The tradition of accountants as public servants,or at the very least as impartial referees,who sought leading roles in political and financial culture continued after the Great Depression and Second World War.Figures such as George May and Lord Henry Benson worked with governments to manage accounting standards and build institutions like the Securities and Exchange Commission (SEC).
Their goals were to protect the independence of the profession and to make sure it had a place at the table of policymaking.Leading partners in US auditing firms worried that the government would take too large a role in regulating financial markets and stifle financial independence and innovation.There was a concern on the part of the auditing companies –which had since the mid-19th century provided the US government with its audits and standards –that compulsory audits would eliminate the role of the public accountant with a government inquisitor.
These arguments,however,lost relevance in the chaotic aftermath of 1929with confidence in the crippled financial sector at an all-time low.Realising regulation was inevitable,George O May hoped that helping to reform and regulate the market would continue to ensure the trusted,independent role of auditors.In his view,respected,private accountants could lead the regulatory charge of the government with the public interest at the forefront of their work.And so volunteer accountants designed the SEC filing forms for financial statements,and wrote the official guide for auditing.May himself helped write the fundamental rules of the Generally Accepted Accounting Principles,still known as GAAP.
While accountants still play leading roles not only in standard setting but also in the crafting of legislation,their work most often goes unseen,at least to most of the world.Think of the historic work of Ian Caruthers in defining and helping implement IPSAS standards.Along with Caruthers,figures including Ian Ball have made major pronouncements,and institutions such as ICAEW have recommended accrual accounting in managing such crises,while also working to create the unprecedentedly fine UK balance sheet.
But accounting leaders are rarely given a true hearing in the press or in government negotiations.This should be big news to all who believe in good government and stable economies,but it remains mostly unknown.When financial crises are discussed,accountants are rarely cited in the general press;and when large negotiations take place over such events as the Greek debt crisis,accountants do not have the audible voices they wielded in the Great Depression.
Even more troublesome,accountants are no longer seen by the public as essential and impartial referees,but rather as the henchmen to financiers who make the “big deals”.As Harvard Business School’s Karthik Ramanna pointed out in The New York Times,there is troubling evidence of accounting standards setters working in the interests of the financial sector and not of the public and investors.This leads to bigger questions about how to impartially fund and staff accounting standards boards.These are hard questions,without easy answers.Societies as a whole must grapple with such essential challenges,and yet the public has no idea of their very existence.
It is my belief that the time is now for the accounting industry to enter into the fray,as Benson and May did,to begin to referee what has become an intractable,ulcerous crisis in Europe.The same could be said for public finance as well as public and private balance sheet standards in the US.
We need the Big Four to finance not only the work of accounting leaders,but to sponsor their voices and work and help rebrand the image of the accountant as someone equal to,if not technically superior to,an economist.Only the leaders of the accounting industry have the funds and muscle to push through reform that is absolutely necessary to the health and sustainability of nations.When an influential US Comptroller General such as David Walker tells the president and Congress that the lack of accrual accounting is sinking the financial management of the US government,we need the leaders of the Big Four to back up such statements with serious publicity and lobbying campaigns.
How can the profession change that?First,it needs to look to its history.Dickinson,Benson and May are good places to start.Their stories need to be taught in accounting schools.And a new sort of accounting education needs to emerge,not simply to produce great technicians –we are doing that –but to also create accounting leaders who can take part in societal and international debate at all levels.A class of accounting leaders must be supported and pipelined.For all this,accountants need to be versed in rhetoric,culture,law,history and religion.
They need breadth and ambition to act as moral leaders to help nations such as Greece,and even Germany and the US,face their massive challenges.This means broadening the training in many accounting schools.My research shows that this is key.To lead,accountants need more complex cultural tools.
On another front,the accounting profession must take very seriously the decline of accounting journalism.Until very recently,major publications such as The Times of London and the Financial Times had talented accounting journalists who looked into standards,politics and the accounting industry.These independent,well-informed voices have disappeared to the detriment of not only the profession,but also to the very wellbeing of democracy.In the long run,the industry benefits from smart,independent and influential voices –as do all societal institutions.If the profession is to survive the coming onslaught of digital,AI-driven accounting,then it must make its case professionally,morally and culturally.
What seems essential now is not only that accounting teachers and professionals work together to rebuild both the brand,presence and very nature of the business,but to create an inventory of both short-comings and opportunities.I have hoped that my book,The Reckoning,would serve as a starting point for this but,so far,it has been seen simply as a celebration of the profession.And it is.But it is also an historical overview of the fall of the profession from its previous heights.
To reclaim its traditional position of leadership,the accounting profession needs its own reckoning:an audit of its place and effectiveness in a world financial society that most agree is now sick and increasingly dysfunctional.I have celebrated what accountants have done.But history shows that now,the responsibility of doing more and serving the public good is on the shoulders of a venerable but too-often marginalised profession.
然而，这些论点在1929年美国金融行业创下前所未有低点的灾难性后果中便不再成立了。乔治·O·梅（George O May）意识到监管是不可或缺的，他希望通过改革和规范金融市场来帮助维护审计师可信、独立的角色。在他看来，受人尊敬的私人会计师在他们的工作的最前沿可以承担起政府对公众利益的监管责任。因此，美国证券交易委员会的志愿会计师对财务报表进行归档并撰写官方审计指南。同时梅本人还帮助编写被称为一般公认会计原则（GAAP）的基本规则。
虽然会计人员仍然在制定标准和起草立法发挥主导作用，但至少对世界上大多数人来说，会计的工作却往往是不被看见的。就像伊恩·卡拉瑟斯（Ian Caruthers）在帮助规范和实施IPSAS标准工作中做出的历史性贡献。同他一样，还有很多人物包括伊恩·波尔（Ian Ball）在行业内提出重要的声明，也有一些机构例如ICAEW推荐引用了权责发生制会计来应对危机，同时也致力于创造空前优良的英国资产负债表。