Comments on: Accounting Rules and Spontaneous Order

By: Warren Miller

Warren Miller — Sun, 15 Feb 2009 23:44:15 +0000

Well, since I make my living, in part, doing M&A work and impairment-testing projects that involve deploying the current fiasco called ‘Generally Accepted Accounting Principles,’ I’d appreciate, David, if you’d be kind enough to elaborate on exactly what it is that ‘ignores 40 years of theoretical development and empirical results from the academic accounting literature.’ An unsupported assertion like that smacks precisely of the ‘loose analogical reasoning’ which you decry.

Like every other one-size-fits-all idea, IFRS and its kissing cousin, fair-value accounting, are the stuff that only theoreticians unconnected to the real world can embrace. In fact, did you know that not a SINGLE permanent employee of the Fin’l Accounting Standards Board (which seems to love the idea of ‘convergence’ between GAAP and IFRS) has EVER done any paying professional work involving the ‘fair value’ nonsense that FASB is dispensing? Not one.

If you think the U.N. is effective, you’re gonna love IFRS, but only if we here in the U.S. cannot stop it. We need to.

I’ve challenged them and toadies such as the director of the CFA Centre for Fin’l Market Integrity, Kurt Schacht (who is likewise unencumbered by any real-world experience in the fair-value arena), and shills @ CFO.com to debate the issue anytime, anywhere, in front of any audience on the planet. They’re still hiding under their desks.

So, if you have a ‘substantial reply’–and I mean ‘substantial’ in the sense of ‘substance,’ not ‘interminable verbiage’–then I, for one, would like to read it. Please enlighten us.

By: David

David — Sun, 15 Feb 2009 23:29:25 +0000

I suppose that I should provide a more substantial reply at Prof. Albrecht’s blog, but the main problem with his argument is that it ignores 40 years of theoretical development and empirical results from the academic accounting literature. There is no need to resort to such loose analogical reasoning when there is a great body of positive research already providing a clearer view of the topic of primary interest.

By: Barbar

Barbar — Sun, 15 Feb 2009 20:15:12 +0000

What annoys me about the “spontaneous order” argument is that it tends to be trotted out selectively to defend the status quo. It’s often a fancily-dressed-up version of “things are the way they are for a reason, ‘unnatural’ change is bound to be bad.” Whether change is natural or unnatural is almost certainly a political question about legitimacy. In the end, “spontaneous order” doesn’t help us transcend the political dispute, not one bit.

By: Marcin Tustin

Marcin Tustin — Sun, 15 Feb 2009 19:20:35 +0000

Wait…what about the possibility that US accounting rules don’t fit the culture of the US particularly well except in so far as they allow business managers to present false accounts more easily?

Surely the process by which USGAAP (and IFRS) must also be scrutinised to see who has influenced them for what purpose?