The last of the introductory videos for my YouTube channel is now out:
Accounting may not be everyone's idea of a campaigning theme, but I have to disagree. What we count matters most in our society, and since accounting deals with money, with which we are obsessed, accounting sets the priorities in our society in ways that few appreciate.
Accounting is, then, deeply political. It makes capital, and the interests of shareholders its priority, by choice.
Labour is treated as a burden in accounting, by choice.
The environment is treated as an externality by accountancy, and so is almost entirely ignored, by accounting by choice.
Whilst accounting has chosen to ignore efforts to beat international tax abuse through public country-by-country reporting by very deliberate choice and even blatant misrepresentation.
And accounting is in dire need of reform.
So accounting matters. It is the lens though which we see a large part of the world. Please take a look at the video. This issue matters.
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I think your YouTube channel is a fantastic idea Richard (though I haven’t got round to subscribing yet I admit), and I understand accounting is important – though you likely understand that it is a specialist skill that probably only becomes interesting after you know how it works and what all the rules are (that is, after years of study) – so decided to grit my teeth and watch your presentation here. I only lost concentration after a couple of minutes so feel I have done well 😉
So, let’s give me some incentive! If I pay attention to all your accountancy videos, will I eventually understand how a company magically gets an extra 2million on the books from ‘intangible assets’? I ask this specifically because I’ve just read this from Craig Murray:
https://www.craigmurray.org.uk/archives/2020/07/banana-republic-corruption/
Regarding the financial investment ‘family office’ that received quarter of a billion contract to supply face masks – so normally I skim over the mysterious large sums of money getting shifted about given as evidence of their dodgyness and have to trust the writer that it is indeed dodgy. So do you think you would be able to give me enough rudimentary understanding – if I apply myself – for me to know what an account (pun!) like this is telling me about the company really?
The accounting theme will have a loot of rather basic education in it at some point….
Good luck with this. What are the viewing figures like from the earlier videos?
The first ha hit 1,000 I think
Then they tail off
We need to get into meaty issues now….recording tomorrow
The key to Youtube success is subscribers rather than viewers. If you are looking at all to monitise the channel the first ‘breakthrough’ barrier is 10,000 subscribers. How is this coming along?
500 in a week
4 really good introductions to 4 really important (and linked) themes. Well done.
Thanks
Sometimes a story, or a title, conveys all you need to understand. I used this article with students for many years. And it was a pleasure to see the light dawning, with some, but not all. Title? ‘Financial accounting:‘In communicating reality, we construct reality’. https://www.academia.edu/12764353/FINANCIAL_ACCOUNTING_IN_COMMUNICATING_REALITY_WE_CONSTRUCT_REALITY
Interesting exchanges on audit failiure and reform on Linkedin by a corporate investor. Pls share with others and chime in, if you want to do so.
It is worthy to note that after the Satyam scandal of 2008-09 Tech Mahindra bid for Satyam Computer Services, and emerged as the top bidder.
https://www.linkedin.com/in/biplabchakraborty/detail/recent-activity/
You may have read about the #accounting fraud that led to the collapse of German fintech company Wirecard. Its auditor, EY, failed for three years running to confirm 2 billion dollars actually existed in a Singapore bank account.
Audit breakdowns are not unique to EY. PwC had failed to detect significant accounting issues at Satyam. Deloitte and KPMG failed to catch financial problems at IL&FS.
It’s time to admit that auditing is an example of what economists call a market failure. The problem will persist for as long as auditors continue to be paid by the companies whose books they are supposed to be scrutinizing.
Rules passed in recent years have mandated that public companies rotate audit firms regularly. Other reforms barred firms from selling consulting services and tax advice to a public company while serving as its auditor.
However, nothing seems to have worked.
Potential solution?
Auditing could become a government function, paid for by taxes. Alternatively, the auditing firms could be hired by the stock exchanges and randomly assigned to companies. To further improve audit quality, a firm could be paid a bonus each time it uncovers significant misreporting.
It is time we fixed this issue. Else we will continue to have repeats of Enron and Satyam.
I hope to do a lot more in this area