Accounting: Should Not We Think Differently, but Logically

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has definitely increased as much as the proportion of the number of pages in annual report!

A rabbit was there in a race and he was allowed to pick one carrot each from any tree in the passage. He started race and started searching the best carrot in each tree. To facilitate his work, he devised some standards to assess the quality of the carrots. He used to check as many carrots as he can before searching the best one. Definitely the selected carrots’ quality was increasing. But the rabbit forgot one thing. He forgot that he was in the race!

The purpose of financial reporting is to facilitate its users. The financial reports are not end in themselves. What we are becoming victim of is known as “goals displacement” in management studies. Isn’t that we concentrated on devising good financial reporting standards and are involved in devising and applying them to such an extent that we really forgot what they are meant for?

Go through the purposes of the framework for preparation and presentation of financial statements (the frame) and an extract from which read as follows:

…To assist users to interpret information contained in financial statements that have been prepared in conformity with IFRS (IAS)…

Should not we think differently but logically? Are not we goals displaced? If some management expert would assess IFRS progress by applying Management by Objectives (MBO), we might have to change our direction. This is true for global accounting profession.

Indeed there are circumstances when complex standards work. The applicability of such standards may be considered to be restricted to those circumstances.

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