The Hindu Business Line : Unsustainable economics of accounting publications

GASPING under the weight of accounting pronouncements? Well, you aren't alone. Try asking the next CA that you bump into, "Hi, how do you think I should apply the deferred taxes standard for discontinuing operations? That is, AS-22 read with AS-24?" Don't fret if he or she thinks you are being too rude. For, in professional circles, decent behaviour means not exposing one another's ignorance; and silent nods and happy smiles are the norm for networking, as during CPE (continuing professional education) programmes.

It may, therefore, seem unusual to hear somebody call the bluff of emperor's new clothes. As Sally Aisbitt of The Open University Business School, UK, almost does in her article`International Accounting Books: Publishers' Dream, Authors' Nightmare and Educators' Reality', in the September issue of Accounting Education, an international journal. Though she has not added `Professionals' Plight' and `Institute's Fantasy', or some such, to complete the confusing picture, the 12-page piece is thoroughly informative about the current starter literature in the IA (International Accounting) domain.

IA is firmly a newsy topic. For instance, Peter Williams writes on www.itweek.co.uk that the move to international accounting standards is resulting in "changes to key measures such as profit and net assets, the format of financial statements and the terminology used in statements." On IFRS3, Accountancy Age reports, "The first accounting standard to be written by the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) has come under intense criticism from European industry accountants, analysts and regulators."

Peter Wyman writes on http://news.ft.com, "Over the past few months a debate has erupted in the press about the hitherto neglected subject of the impact of international accounting and auditing standards on the long-established British principle of `true and fair' accounting." If interested, follow the `true and fair' thread on www.frc.org.uk, where the Financial Reporting Council (FRC) of the UK explains elaborately why the phrase `presents fairly' introduced into the accounting framework does not dethrone `true and fair' from its `cornerstone' status.

Convergence of standards

In the post-Enron world, we find countries moving `from rules-based to more principles-based accounting', to meet the increasing `pressures to increase transparency in financial reporting'. And, "National standard setters in the major economies are working closely with the IASB with the aim of achieving convergence on a single set of high quality standards," writes Aisbitt.

After a period of lull in accounting education, there has been the trend to combine accounting with business or management, notes the author about the revival of interest. "The professional bodies' increasingly strict approach to continuing professional education (CPE) seems to be contributing to demand for higher-level courses from the bodies themselves, commercial training organisations and the University sector. These newer awards often seem to include the word `international' in their title or to include courses (modules) with an international title," observes Aisbitt.

However, there is the problem of quality literature and, consequently, teaching resource. Publishers see a great opportunity and would only be too keen to provide materials and textbooks demanded in the wake of changes to the economic environment. And "authors are doing their best to rise to the challenge of meeting the demands of the perceived market at a time when changes in regulations ensure books are out of date as soon as they are published."

Authors are trying really hard. Citing a 2004 paper, Developments in Country Studies in International Accounting - Europe, co-written with L. Evans, Aisbitt points out how "authors are increasingly collaborating across national boundaries and the research has moved from descriptive to analytical."

Good IA book

Despite a range of new media, textbooks are not going away as yet, when it comes to learning, be it in college or in a CPE programme. "Textbooks are a tried and tested medium that is inexpensive (relative to the cost of infrastructure required for multimedia learning) and allows flexibility for the time and place of study," writes Aisbitt. There are many books that claim to deal with IA, she notes and refers to a similar study conducted in 1998 by Laidler and Pallett, who had "identified a number of desirable features of good books on comparative IA". Disappointingly, though, many texts that the duo had included in their survey "do not seem to have survived to second editions," Aisbitt finds.

Drawing on research, the author zeroes in on the following six as the criteria for `a good book on IA': "Clearly identify difference between multinational accounting and domestic accounting; build on existing relevant theory; consider how the factors addressed impact on MNC strategy and decision making; clear philosophical perspective; academic rigour; global (as opposed to regional) focus." Aisbitt presents the results of her detailed analysis of content in eight books. Check this before you buy the next book on IA. Three good things about the reviewed books are: One, academic rigour, `with clear links to official pronouncements and academic research'.

Two, looking beyond home, for a global perspective. And three, not merely descriptive of differences in accounting practices, but trying to set out `their consequences for decision makers'.

Keeping up-to-date

A great worry for authors, students, professionals and institutions such as the ICAI is current-ness. One solution is the `companion web site' of the book where the author/publisher posts updates. Sites of big accounting firms often provide education in the form of useful comparison. For example, the October issue of Assurance EYe, a newsletter from Ernst & Young analyses the ICAI's exposure draft on `Proposed Accounting Standards Interpretation (ASI) - Applicability of AS 29 to Onerous Contracts' and `Proposed Accounting Standard on Financial Instruments: Presentation'.

Catch up also with the following in the EYe: Key differences between IFRS (IAS) and Indian GAAP; and "peculiar accounting issues and editorial perspective on matters relating to creation of deferred tax liability on special reserve created under Section 36(1)(viii) of the Income-Tax Act, accounting of prepayment fee paid for replacement of high cost debt with low cost debt and revenue recognition in case of multiple element contracts."

Try the `weekly digests' from accountingeducation.com, and download recent published financial statements through edgar and huginonline, suggests Aisbitt, for those who want to stay in touch with happenings on in the IA front.

Suggestions for the IA market

The paper offers suggestions to publishers, authors and educators. Publishers of books on IA "do not seem to have developed a clear marketing strategy," opines Aisbitt. "Some seem to be unclear about the segment of the market they are targeting, while others seem to be offering a number of very similar products to a single market."Aisbitt rues that texts don't quantify `the full economic effect' of differences in accounting practices. She is plainly surprised that textbooks "do not give greater weight to enforcement mechanisms, notably national audit requirements", despite earth-shaking scandals.

Another lacuna is the preoccupation with the `larger (listed) commercial enterprises', at the cost of `smaller businesses and the not for profit sector'.

A disturbing observation in the paper is that "there is still more than a hint of the paternalism of colonialism when talking about IA in connection with emerging markets or developing countries, not least because there seems little consideration of the different activities to be reflected in financial statements."

The underlying assumption that Aisbitt culls from the IA books is that "all transactions can be shoe horned into accounting practices designed for the developed world's commercial activities and structures." A legitimate worry for many accountants is whether what the prime author of standards in this country, the ICAI, does is nothing more than shoe horning into imported standards. What does Aisbitt say about the load of standards literature that you and I are groaning under? `The increasing frequency of new editions' reflects the pace of change, she states. But it is "clearly unsustainable in the longer term either from the point of view of the economics of publication or the sanity of the authors," she points out. Customised books, drawing from different sources, and splitting of content between the Net and book, are among the paper's suggestions.

*********

1.8 million miles unaccounted for

IN A story dated October 26, www.theonion.com says, "A report issued Monday by NASA's Oversight Commission indicates a cumulative 1.8 million miles unaccounted for on the Atlantic, Discovery, and Endeavor shuttles." NASA Administrator Michael Griffin is alleged to have taken the space shuttles on shopping trips and joyrides. One learns that the shuttle, which costs an estimated $2 billion per launch, was once seen at Georgia's Augusta National Golf Club's parking lot.

AccountSpeak@TheHindu.co.in

D. Murali

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
The Bangladesh challenge

Oily deals

Managing earnings management

Corruption isn't a natural disaster

Needed, a new prescription

Unsustainable economics of accounting publications

Why retail sector needs FDI

The new Dataveillance era

Marketing vs TQM

Globalisation and labour policy

Rebuilding Brand Bangalore

Checking tax evasion

Wake-up call