See
also: List of Economic Topics 
Accounting
reform
Accounting
reform is an expansion to accounting rules that goes beyond the realm of financial
measures for both individual economic entities and national economies. It is advocated
by those who consider the focus of the present standards and practices wholly
inadequate to the task of measuring and reporting the activity, success, and failure
of modern enterprise, including government. "Accounting", says Baruch
Lev, a notable proponent of such reform, "is about accountability".
He notes that the present regime of accounting rules dates back about 500 years
to Renaissance Italian practices.
Business
Limited
reforms within professional management circles have led in the past to activity-based
costing, economic value added, regret and risk measures.
Not
only do most businesses raise capital based on numbers derived from current standards,
here are extensive lobbying efforts by the accounting industry to keep those standards
roughly as they are: complex, loopholed, and unable to be applied or audited easily
by laymen.
Heads
of the United States Securities and Exchange Commission since the 1980s have consistently
complained that this lobbying makes it impossible for them to apply meaningful
reform, even in the wake of accounting scandals, e.g. that which felled Arthur
Andersen in 2002.
National
Economies
Any
comprehensive scheme of accounting reform is a major professional and academic
enterprise; Typically it requires examination of the role of each of the fundamental
factors of production, an analysis of capital indicating how many types there
are and how each supports each factor of a production process.
A
comprehensive scheme that would affect, for instance, the United Nations standards
for national accounts, the rules of the Bank for International Settlements, or
listing requirements on the major stock exchanges, would have to defend any change
against critics that advocated lesser reforms - making it extraordinarily difficult
to achieve simultaneous consent.
Marilyn
Waring, who deeply criticized the UN account system for systematically under-valuing
the social and economic contributions of women, stated also that she had to read
literally an entire room full of books in order even to understand the standards
applied today. It seems unlikely that most advocates of reform have the stamina
to do so, nor the background required to debate each issue with economists or
accountants that build their careers on the detailed extension and improvement
of standards that already exist. Most critics considered reform prospects bleak.
The
critique from ecological economics was even more fundamental, claiming that most
means of measuring well-being indicated that the developed nations were in a state
of "uneconomic growth" through the 1980s and 1990s, due mostly to failures
of measurement, most or all of which could be tracked back to the practice of
using the Gross National Product as a means of making money supply decisions.
This is perhaps the most obvious and widely-held critique of current national
accounting and economic growth reporting systems - the creators of the GNP and
GDP measures themselves advise against its use as a single measure of economic
growth - but politicians and press typically do so without caveat nor apology.
Robert
Costanza, Paul Hawken, Amory Lovins and others who advocate a consistent global
system for valuing natural capital, note that failures in this area are particularly
grim: promoting extinction, loss of biodiversity, climate change and destructive
weather for the sake of such "growth". John McMurtry characterized this
as "the cancer stage of capitalism".
What
makes "economic sense" under current standards, they argue, is in fact
leading to ecological catastrophe, social conflict, and economic chaos.
Governments
One
barrier to accounting reform are governments themselves. They have the authority
to determine what are accepted accounting principles, while using questionable
accounting practices themselves. Governments, for example, pay off operating costs
with longer-term debt and thus overstate budgetary surpluses or conceal operating
deficits. This is not unlike the allegedly fraudulent practices of some corporations.
Notable
advocates
Notable
advocates of accounting reform:
Economics,
Banking & Finance
