Accounting may not have the most obvious path toward bringing justice to the world, saving the planet, housing the homeless or feeding the hungry but, as one exceptionally gifted accounting thinker has observed, we as accountants can contribute meaningfully to the diminution of the world’s maladies, and it’s time we do so.
We are not exclusively in the business of financial measurement and performance. Today, more than ever before, the accounting profession is raising its collective hand to inform solutions to some of the world’s greatest challenges. Simply put, we have something to offer and we are here to do good.
Many have observed that we now live in an information society — we depend on data, converted into information, to support virtually all significant decisions — in business, in policy, in public health and education, every industry and every household depends on data. Where does this information come from and what are the attributes that make it useful?
While information comes from a variety of sources, it is clear that it varies considerably in its veracity. What are the necessary preconditions to be and become comfortable that the information available is suitable for supporting decisions — from the individual level to those that fundamentally affect all of society?
Accountants are in the information business. The profession, through the Financial Accounting Standards Board, has identified the attributes that make accounting information useful, but those are generally timeless characteristics that are necessary preconditions for information to improve decision-making. Among those attributes are:
- Representational faithfulness. Meaning, the information corresponds to the phenomena in the real world which it purports to represent — it is reliable. To be representationally faithful the information must be objective and not slanted to favor one party, result or outcome.
- Relevance. Is the information pertinent to the decision being made? In order to be relevant, the information must be timely and understandable to those for whom it is prepared.
The role of accounting and our profession is to provide substantial assurance to information users that the data being employed to assist in making decisions fulfills each of these crucial attributes. We achieve this fundamental goal by requiring our practitioners to frequently be independent of the entities providing the data, to always be objective (i.e., exhibit judicial impartiality), competent and careful, and to always act with integrity.
It matters not whether the information in question is contained in the performance reports of the world’s largest business enterprises, sole proprietorships, large or small governments, not-for-profit organizations and individuals.
As a field, accounting recognizes the great need to expand the reliability and relevance of information far beyond the measurement of financial performance. What we do is not solely about the measurement, presentation and disclosure of net income and components of earning.
Recently, our profession has created the International Sustainability Standards Board. This organization, like the International, Financial, and Governmental Accounting Standards Boards, is developing reporting standards related to environmental, social, and governance matters, each integrally related to the overall assessment of an entity’s sustainability. As this information is required by investors and governments, it is, in my view, absolutely essential that it possess the general attributes that enhance the decision utility of any information.
As accountants, we have the tools to provide all levels of decision makers with the information they need to set policies, create meaningful change and hopefully, to do good in this world. Through the ISSB, ESG goals and other tools, we are reshaping what “business as usual” means. But to really make a difference, each of us as accountants and professors and business leaders must look at what we can offer from our set of skills to improve conditions today and for future generations. It’s time to think differently.
