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Global Alliance Calls for Accounting Reform
Complexity and
elusiveness of statements not working, group says.
Readership
in Lean Accounting News is approaching 4,000 subscribers,
all of whom have signed up since late 2006, when we first
published. This alone serves as ample evidence that the lean
accounting/accounting for lean movement is growing. We need
not even consider sell-out attendance at four conferences
and a proliferation of lean accounting classes in the U.S.
and overseas.
Although
most practitioners have come to know about lean accounting
via a connection to lean management practices, some of the
movement’s growth has been spurred by a realization in the
finance and accounting industry that it needs to change to
keep up with the times. One of the most recent indications
of this is a new report released by the
Global Accounting Alliance, which is composed of
professional associations around the world, including the
American Institute of Certified Public Accountants.
“Getting to
the Heart of the Issue,” is a 27-page report that addresses
the complexity and principles of accounting practices and
makes recommendations for needed reforms, particularly in
light of the rapid emergence of a global economy and changes
in business practices. The report is based on interviews
with accounting “thought leaders” from different countries.
Although
the report does not specifically address lean accounting, it
does espouse many of the same ideals. In the executive
summary, the GAA states the purpose for preparing the
report: “. . . to ascertain views from a broad
cross-section of stakeholders in the international arena to
barriers to the practical application of a more
principles-based accounting regime and how the current
complexity and detail in listed company financial statements
could be reduced, so as to focus on better communication
with financial statement users.”
Sound
familiar?
Here are
three other statements from the report that support lean
accounting ideals:
“The people
who make the financial reporting decisions need strong
support networks to protect them from strong business
pressures that may drive them to do the wrong thing or not
the best thing.”
“…there needs to be significant changes in the education of
accountants, particularly in North America, to shift the
emphasis away from the application of rules and towards a
system where thinking their way through problems and issues
is the natural route for an accountant to take.”
“There is certainly a consensus for the idea of changing the
nature of financial statements.”
Perhaps
this is opening a door for lean accounting. The GAA has
committed to holding a series of debates on the issue,
although details of those (other than they will be
international) are forthcoming.
In the
meantime, the GAA has allowed Lean Accounting News to offer
both the executive summary and the
full report to our
readers. We are grateful for their collaborative generosity.
The report is also available for free on the GAA Web site,
http://www.globalaccountingalliance.com.
Thanks for
reading, and please send any comments on the GAA report to
me. I would like to keep discussion of this topic alive in
future issues of Lean Accounting News.
Sincerely,
Tonya Vinas
Editor
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