Matuszak Blog - accounting

The Accountant's Readership

According to a survey conducted on World Book Day last year, accountants read more for pleasure than many other professionals. It was estimated that accountants spend an average of more than five hours per week reading their favourite choices. Five hours may not sound much, but in the modern busy world it represents quite an investment of time to devote to reading – certainly more than the MPs, journalists and teachers surveyed were able to put in.

Airport metaphor

"The SEC program will be a definite catalyst," says Paul Penler, a principal at Ernst & Young and chairman of the XBRL U.S. Consortium. "When I began working with XBRL in 1999, I knew it would take 6 to 10 years to take off. It's like building an airport — there is a huge amount of infrastructure needed before planes can take off and land."

Forming the Polish Local XBRL Jurisdiction

Use of XBRL is gathering momentum

XBRL explained

Shift in reporting practices

[...]XBRL may, over time, encourage a shift in the financial reporting practices of registrants. The use of tagged data, XBRL and XBRL taxonomies will provide users with increased comparability and an enhanced ability to perform benchmarking and other comparative analyses. The availability of more effective benchmarking tools is likely to drive market demand for increased comparability in the financial information included in 11 Commission filings. This market demand will encourage registrants to adopt financial reporting practices that further enhance the transparency and comparability of their financial information.

Mental accounts

Modernity has taught us not to accept a certain way of doing things just because things have always been done in that way (p. 80).

Consider being posed with this problem:

Imagine that you have decided to see a play where admission is $20 a ticket. As you enter the theater you discover that you have lost a $20 bill. Would you still pay $20 for a ticket to the play? (Kahneman & Tversky, 1984, p. 347)

Almost 90% of people asked this question said yes.
In contrast:

Imagine that you have decided to see a play and paid the admission price of $20 a ticket. As you enter the theater you discover that you have lost the ticket. The seat was not marked and the ticket can not be recovered. Would you pay $20 for another ticket? (Kahneman & Tversky, 1984, p. 347).

Now, less than 50% of people said yes. What is the difference between the two cases? From one perspective, they seem the same; both involve seeing a play and being $40 poorer or not seeing it and being $20 poorer. Yet people don't seem to see them as the same. What Kahneman and Tversky have suggested is that the difference between the two cases has to do with the way in which people frame their psychological accounts. Suppose that in a person's internal accounting system there is a cost-of-the-theater account. In the first case, the cost of the theater is $20; the lost $20 bill is not properly charged to that account. However, in the second case, the cost of the theater is $40 (two tickets), and for many people, $40 is too much to pay. On the other hand, suppose that the person's internal accounting system has a cost-of-a-day's-outing account. Now the two cases may well be equivalent in that the lost ticket and the lost $20 both add the same amount to the cost of the day. So some people keep narrow cost-of-the-theater accounts, whereas others keep broader cost-of-the-day accounts. Which of them is rational? What is the way in which rational decision makers should keep their accounts?
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The Great Profession Manifesto

Greatness comes from aspiring to high expectations and from doing what has to be done to meet them. That is the spirit that has driven the CPA profession, and it demands far more from us than merely complying with the rules set down by regulators.

And another quote:

There is one last characteristic of great professions that we must keep in mind: Great professions don’t just accept change. They don’t just embrace change. Great professions initiate change—for their own good, for the public good and for the sake of the future.

Does anybody know such a text in Polish?

The New Accounting: the Pacioli Paradigm and the Google Paradigm

Accountants must know how to find, assemble, and report data. Now, however, the conceptual basis of accounting is shifting from one of assembling numerous transactions and presenting the results in relatively fixed formats (the Pacioli paradigm) to one of selecting relevant data from a mass and directing it to the decision makers in a form that is unique and useful to them (the Google paradigm). This is a major change. Accountants become managers of information, both internally and externally. As a result, information flows are shifting from standardized reports to selective, user-prepared, customized reports and are spurring the growth of faster, data-centric technologies.
[from: Trites, G., Decline of the Age of Pacioli: The Impact of E-Business on Accounting and Accounting Education. p. 176 (authentication required)]

And here is a reference to so called paper paradigm in accounting:

The paper paradigm is a reference to today's financial reporting, which is largely shaped by the sets of rules that have been developed in order to make those documents as useful as possible to the investment community. Because people are the primary initial consumers of these documents, fixed patterns have been developed, information is presented redundantly (how many times does Cash or Net Income appear within a financial statement?), and rules to present no less or more than necessary limit what appears in a document. In a data environment, it does not matter if a fact appears within the context of the Balance Sheet or the Notes to the Financial Statements an automated system can discover and reuse the information with the same ease if it knows what to look for. A paper-paradigm report does not necessarily need to be printed on paper; it is presentation-driven, and the original source can be a PDF document, a simple text file, or an HTML representation.
(...)
XBRL can add structure and make the reporting process more automated -- something with the potential to be much better than today's paper paradigm. 
[from: Cohen, E., Compromise or Customize: XBRL's Paradoxical Power. (authentication required)]