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engaging the broad accounting community

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    Julie Smith David
    What is the value proposition for a broadly defined...
    question posted November 9, 2010 by Julie Smith David, last edited February 10, 2012 
    1388 Views, 2 Comments
    What is the value proposition for a broadly defined accounting profession?



    • Ira Solomon

      I think it will be critically important to define our field i.e., accounting.  This definition needs to be broad enough to accommodate the traditional domains and roles of accounting (e.g., external financial reporting) and to accommodate new domains and roles (e.g., sustainability etc.,).  

      I know that there could be many thoughts on this matter—I offer here as an example a definition that we have been using and has served us well at the University of Illinois. 

      “Accounting is information that facilitates implicit and explicit contracting.”

    • Julie Smith David

      I agree with Ira that the definition of accounting will dramatically impact the work that your Commission is taking on.  I urge you to consider accounting broadly and take this opportunity to reflect on our strengths and weaknesses, and the role that we can provide.

      This type of discussion was lively in the 1960’s and 1970’s.  I appreciate the work of Ijiri to develop a structure to accounting practices, and the following work by database theorists (such as Sorter, Haseman, Winston, and McCarthy).

      Much of this work builds upon Ijiri’s 1967, p 3 definition of accounting:

      “Accounting is a system for communicating the economic events of an entity.”

      This definition incorporates the idea that accounts are focused on economic events – but doesn’t limit the scope of “accounting” to financial data.  Rather, later work explicitly recognizes the value of incorporating non-financial data into the “accounting system” and I believe accountants would be well-served by recognizing their value as “measurement experts” who are able to provide high quality information to make decisions.

      If you take this approach, then accounting should be much more broad and it provides us opportunities to really help an organization by being strategic partners in decision-making.  It will also make us reflect on the types of information that we should evaluate/provide (such as sustainability reporting that Ira mentions).