Friday, December 16, 2005

Accounting Deserves More Respect

BusinessPundit is on a roll today. I liked this post so much that I'm not going to just link to it, I'll quote it. The original is here:

Does accounting deserve more respect?

Historians have long suggested that there is a relationship between accounting advances and economic development. Economic historian Werner Sombart, for example, theorized back in the Thirties that the invention of double-entry bookkeeping wasn’t an innovation that arose during the Renaissance, but the innovation that actually enabled it to take off. However, professors Gregory Waymire and Sudipta Basu argue that accounting may have made an even more profound contribution to human civilization.

The two have developed a theory that accounting, far from being something
that is a kind of side effect of a complex society, actually grew up with it.
They believe it might even be said to have enabled the evolution of economically
complex societies in the first place. Everyone talks about accounting as the
language of business, but the professors contend that it really does represent a
specialized kind of language – one which humanity would not have gotten very far
without. As Basu says, “you couldn’t have firms and markets and governments if
you didn’t have accounting.”

So Enron's cutting-edge accounting tactics were actually pushing society forward? Okay, okay, maybe manipulative isn't really cutting-edge... next you'll probably say that pro forma earnings statements aren't cutting edge either...

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