In the early days of the global economic meltdown of 2008 and 2009, Peter J. Wallison, the Arthur F. Burns Fellow in Financial Policy Studies at the American Enterprise Institute, declared:
Fair value accounting is clearly the reigning orthodoxy among accountants, but is that the right test? Accounting is simply a measurement system. What we want to know determines what and how we measure.
Which is more important, the balance sheet or the income statement? Do we want to measure financial strength or earnings per share or cash flows? Is the purpose to inform equity investors or creditors and counter parties? Does one measurement system meet all of these objectives?
Given its impact on institutions and whole economies, common sense suggests that we consider whether one means of measurement is the only one we should be looking at. The world view of accountants at a particular time should not determine the answers to these questions. It is important to recall the famous remark of Clemenceau that war is too important to be left to the generals.
Many such issues impact the public interest. We, the Public Interest Section of the American Accounting Association, believe in addressing such topics with vigorous and spirited discussion in a social media forum.
Accordingly, we are proud to announce the introduction of a new feature for our social media network. Five distinguished thought leaders have agreed to serve as Contributing Columnists for the Section’s blog, newsletter series, and web site.
The five Columnists are:
Steven Mintz, Emeritus Professor, California Polytechnic San Luis Obispo, USA; Prem Sikka, Emeritus Professor, University of Essex, UK.
Michael Kraten, Associate Professor, Providence College; Richard (Rick) Kravitz, Editor-In-Chief, CPA Journal; Sri Ramamoorti, Associate Professor, University of Dayton.
Each of these individuals has agreed to contribute two editorial essays per year for publication by the Public Interest Section. Our current plans include the distribution of two guest editorials per year from other colleagues, resulting in a full year of monthly thought pieces.
We are immensely grateful to these individuals for supporting our growing presence in social media. Please join us in welcoming their contributions to our intellectual content.
Source Credits: We thank Sri Ramamoorti for suggesting the quote by Peter J. Wallison. It appeared in the April 30, 2008 edition of the Financial Times, in an article entitled “Judgment too important to be left to the accountants.”