Finding meaning in accounting

Posted on February 8 2020

I admit I try not to work on Saturdays. I like my work. I also enjoy leisure time. But today I am going to speak to young accountants about green accounting. And that means dragging myself into London and back, and train time means time to blog*, and time to think about what I am going to say.

I will talk about accountancy's so far inadequate response to the climate crisis. I will talk about the need to put the climate crisis on the balance sheet. And I will, of course, give sustainable cost accounting a mention (or two).

But if I am honest, that's not my real reason for wanting to speak on a Saturday, important as I think all that is. My real focus will be to ask my audience to think that the rules of accountancy can be challenged.

I worry about accountancy. Whilst compliance is a necessary requirement of accountancy, unthinking compliance is always dangerous. My fear is that very little about accountancy training, whether at university or in professional firms, asks that a student actually think. The big issues that dominate other academic disciplines - including the natural sciences, where it is thought to be entirely reasonable to ask existential questions as to what the whole subject is about - seem to wholly pass accountancy by.

If economics has ceased to question the purpose of the firm then accounting has, lock, stock and barrel assumed economics is right to say that it is about making profit and that maximising that profit is what the firm should do. The fact that not one accountant on earth could answer the question as to what that really means (because the goal is oxymoronic: it is meaningless) does not alter that.

But in that case I hope that in the rather short time I have today I will impart my real message. And that is that younger accountants should think about the rules they are asked to comply with and not take them as a given, however easy that is to do. And once they answer the question, then they should ask what to do about the answer, which will (and this is inevitable, I suggest, in the current economic environment given the current rules of accounting) imply that at least some of what they are being asked to do makes no sense at all.

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* There was a reason for the star. My other use of train time today is reading an advance copy of Stephanie Kelton's new book ‘The Deficit Myth'. I am looking forward to that.

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13 Responses

  1. George S Gordon says:
    February 8 2020 at 1:28 pm

    You lucky reader, you! I have to wait till 9th June for my pre-order.

  2. A says:
    February 8 2020 at 4:07 pm

    I am an accountant, working in the belly of the capitalist beast, but one who (albeit quietly, by necessity) constantly questions the purpose and meaning of the rules we professionally interpret advise and lobby on.

    It helps having a background not in business studies or (mainstream neoclassical) economics or engineering or physics as so many do but in critical humanities. It helps having read Marx, knowing where value comes from, frankly, something foundational to a commercial balance sheet but shrouded in mystery, even by Keynesians and post-Keynesians.

  3. Marie Thomas says:
    February 9 2020 at 8:33 am

    Suggesting that students or new practitioners think about, and even question, the reasons for established practices and rules…now, that’s also a ‘bottom up’ action you know!
    I do hope you won’t be the first teacher/lecturer they’ve had doing that though, it would be a shocking a indictment on their education if that were the case, but then there’s so much to improve in the education field as well…

  4. Michael Corcoran says:
    February 9 2020 at 10:36 am

    My grandson has just received an unconditional offer to study for an accounting and finance degree programme. He put together an interesting personal statement for his UCAS form. It focused on the role of the accountant as an advisor to companies likely to be affected by climate change, and theIr responsibilities to stakeholders beyond their share holders. He took, as his example, oil companies. It might be dismissed as a little naive, but It displayed some insight into the complexities of the issues.

    It reminded me of the transition, back in the 1980’s, that quantity surveyors made to become building economists. Then it was the demand for more energy efficient buildings that took that profession from what we termed ‘bean counters’ to colleagues we could turn to for life-cycle assessments of costs and benefits. Before that time you would often hear frustrated architects mutter under their breath Wilde’s line from Lady Windemere’s Fan.. “a man who knows the price of everything and the value of nothing”.

    A request, Richard, can you point us to texts, your own and/or by others, that describe what needs to be the role of accountants into the future?

  5. Henry Winter says:
    February 9 2020 at 11:19 am

    “ If economics has ceased to question the purpose of the firm”

    It’s answered it!!. Ronald Coase and all tha, Nobel Prize worthy stuff.