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Archive for December, 2008

This article was published in the American Journal of Business Education.    I am entitled to place a copy on my personal web site, so am placing it here at this time.  Click here for a pdf copy.

The complete citation is:

Albrecht, W. David.  (2008).  Ace Your Accounting Classes:  12 Hints To Maximize Your Potential, American Journal of Business Education, Volume 1, Number 1 (Quarter 3), pp. 1-8.

ABSTRACT

Many students experience difficulties when they try to get good grades in their accounting classes, and they are searching for answers.  There is no single answer.  Getting a good grade in an accounting class results from a process.  If you know and understand the process-and can apply it–then your chances are much improved for getting a good grade.  I recommend a process that includes twelve steps: (1) know what the professor expects, (2) be your own teacher, (3) work hard from the first day, (4) attend every class, (5) take good notes, (6) participate in class, (7) read the textbook several times, (8) look for patterns, (9) do the homework, (10) study with a friend, (11) study long and hard for each exam, and (12) live healthfully.


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bailing-water-2I’ve been posting to AECM for years.  AECM is the e-mail listserv for hundreds of accounting professors.  One topic I regularly post on is accounting and how it is perceived by the popular culture.  Youtube is one of my favorite sites (google images is the other).

The bailout and sub-prime crisis has have spawned many commentaries, satires and songs.  A running theme through these videos and songs is the public’s disgust with the following:

  • corporate executives
  • for-profit financial institutions
  • government regulation
  • politicians

I went to Youtube and typed in the search word “bailout”.  Back came more than I ever imagined. What creativity, what artiistry, what fatalism, what indignation!

I’ve compiled a fairly long list of videos.  I hope you make it through all of them.  In compiling the following list, I’ve tried to be very selective (dozens of various videos failed to make my list).  My favorites are embedded.  These are very good.  I hope you view them all.  Links to other very good videos are at the bottom of this page.

I find it very interesting that in this crisis accountants aren’t receiving any scorn. This is very much unlike seven years ago with the Enron and Arthur Andersen scandals.

Sponsor a CEO

http://www.youtube.com/watch?v=qDC0qcf0kzE

Where’s my bailout?  #1

http://www.youtube.com/watch?v=kIjbMRU1EgU

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blog-iconLaw professors do it–they do it with appeal.   Economists do it–with demand and supply.   If accounting professors did it (they don’t), they would be certified to do it.  Why don’t accounting professors do it?

We’re talking about blogging, of course.  This essay follows Accounting Professors Who Blog, where I provide links to the ten accounting professors who currently blog.  Figuring out why accounting professors shun it is the subject of today’s essay.

Basics of Blogging and a Short History

What is a blog?  Blogging is similar to the centuries-old practice of keeping a diary or regularly writing thoughts on paper and binding the pages into a journal or notebook.  A blog is a web site where an author (or team of authors) writes or comments on an issue or several related issues.  Additional comments are added on a regular or semi-regular basis.  Every time a blogger adds to the web site, it is called posting.  Blogs can be personal, about professional topics, or about current news events.  There are several web sites devoted to providing the means for bloggers to do their thing.

Blog is the popular permutation of web log.  According to Rebecca Blood, the term blog was created in 1997 when Peter Merholz rearranged the letters of web log into wee blog.  Soon thereafter, the noun form of blog was altered into a verb.  [Transforming nouns into verbs is great fun.  Betamax, a videocassette recorder, means to be made obsolete when used as a verb].

Of course, blogging started before there was a term for it.  There are several online histories of blogging [1 2 3 4].  They all pretty much say the same thing.  Blogs started in 1992 or 1993 and early on were web pages (with updating) containing histories of favorite web sites.   By 1997 or 1998, software was available to automate the posting, obviating the need for bloggers to be html coders.  By this time, people had started blogging about personal or professional thoughts, incorporating images and audio files and video files whenever deemed appropriate.

Some consider early Usenet groups and e-mail list groups to be antecedents of blogging.  Some  consider e-mail lists to be equivalent to blogging, just done via e-mail instead of being posted to web pages.  Of course, people have been writing journals for centuries, they just were doing it on paper instead of online.

The practice of blogging grew rapidly.  Eventually the number of active blogs peaked at 100,000,000.  As blogs become inactive, new bloggers take their place.

Why Blog?

Typepad, one of the blog-hosting companies, posts these reasons to blog.  I don’t think they provide much motivation, but then, it’s difficult to get me excited.

  • A blog is a simple, cost-effective way to create a professional online presence.
  • A blog creates a conversation between you and the people who matter to you.
  • A blog is a tremendous way to boost your search engine rankings.
  • A blog delivers a huge impact for very little money.
  • A blog allows you to take control of what you publish.
  • A blog allows you to develop a position of thought leadership.
  • A blog is a valuable business tool for collecting customer feedback.
  • A blog creates a historical record of your content.

*   *   *   *   *   *

At the core of blogging, it is all about personal expression.  It is about making a contribution where the writer describes who and why he or she is.  Sandhill Trek as a nice piece–Why do we blog?– where many bloggers contribute their thoughts as to why they blog.

A belief held by many bloggers is that blogging is a natural form of self expression. It is the modern day equivalent of writing a diary or writing to pen pals.

ithinkthereforeiblog

But more to the point of this essay, why should professors blog?  Martin Weller, The Ed Techie, has two nice pieces entitled, Encouraging Educators to Blog, and Some More Reasons to Blog.  He has done such a good job of justifying the items compiled into his list, that I’m going to shamelessly paste them verbatim into this essay.  Weller, take it away:

  • The economics of reputation – increasingly one’s reputation online is seen as a valuable commodity. This is partly because a good reputation is difficult to establish and also because in an environment where content is free and widely available then quality becomes a differentiating factor.
  • Engagement with your subject area – in many subject areas the blogosphere is where much of the informed and detailed debate is occurring. If this is the case in your subject area then not to be part of it limits your expertise in the same manner as not publishing journal articles (perhaps even more so). If your subject area is not one widely engaged with blogging then this represents a good opportunity to establish yourself as one of the lead experts.
  • Increased reflection – keeping a regular blog seems to encourage a degree of reflection and critical analysis as you comment on conferences, workshops, research, etc.
  • Personal status and payback – being a recognised blogger in any field is likely to raise your profile and thus lead to increased requests for participation in projects, key note speeches, consultancy, invited papers, etc.
  • Organisational status – as an institution the Open University (UK) is not as prominent in the blogosphere as it should be. While company blogs tend to be rather bland, there is a positive image and potentially student recruitment effect for the institution if there are known to be a number of good bloggers in residence.
  • Link to teaching – the type of content used in courses is increasingly diverse, and one model for including up to date information is to have feeds from a number of blogs incorporated in to teaching material.
  • Eating our own dog food – increasingly students are encouraged to use blogs in courses, and so we should be demonstrating how they can be effective.
  • It exposes the process – much of the community of practice theory argues that being able to participate in a community novices should be able to observe, and to an extent participate with, experts in action. A blog is good means of allowing others to observe some of the less well thought out ideas and ongoing projects of an academic. This applies to both students and other members of staff, as Christopher Semmus argues, blogging represents a good model for mentoring within a university. James Aczel has started a blog for his course H809 during production, which will reveal many of the design decisions taken in the course, and potentially be a useful resource for future students on the course.
  • It provides a useful tool for engaging with other technologies – the array of web 2.0 technologies can be quite daunting. However, many of these relate to blogging, and so by keeping a blog one is exposed to these technologies in a meaningful context. The technology required to keep a blog is fairly simple to use, so it is easy to get started, and then once your blog has momentum you may wish to explore some of the related tools and technologies. For instance Technorati is a site for ranking blogs, so you may want to claim your blog in here, and Feedburner is a means of allowing people to subscribe easily to your blog, while Slideshare allows people to embed their powerpoint presentations within their blog postings, and so on. By keeping a blog there is a motivation and a means to engage with many of the newer technologies that have potential benefits for our students.
  • It’s a good means of getting down, or building up, all those thoughts that never quite get in to journal papers. Either because journals are too restrictive (they’ll want lots of data for any claim you make), or because you never get around to it, but I know that I for one, have an idea (or maybe it’s an idealet) every day (okay maybe every week – month? go, on year then), which never finds an outlet and is then lost. The blog is a good means of capturing these, and over time they may find their way in to something more research recognizable.

questionmarkAll of these reasons could appeal to accounting professors.  But there is an important additional reason for accounting professors to blog, stated so insightfully by Steven Muzatko, Associate Professor of Accounting at University of Wisconsin at Green Bay.  Professor Muzatko says that each entry in an academic blog can be a  think piece.  Think pieces, for him, are not only interesting, but also important.  He was attracted into academic accounting because of its history of publishing such pieces in The Accounting Review and other journals.  Unfortunately, very few think pieces have been published since 1970.

In some academic disciplines, blogging is becoming very popular.  In law, medicine, economics, education and literature there is a growing expectation that professors will blog as part of their normal set of duties.  In law, especially, blogging is very common.  But not so in the academic discipline of accounting.

Why Accounting Professors Don’t Blog

As was seen in my first essay on blogging, Accounting Professors Who Blog, the practice of blogging is not common among accounting professors.  There are only ten and one of these is written by a retired professor who has become a consultant.  Why isn’t blogging a common practice for accounting professors?

The first reason for few blogs by academic accountants is that blogging simply doesn’t count as scholarship.  The major accrediting agency–AACSB– pretty much controls most aspects of the largest colleges/schools/departments of business.  AACSB defines the basic qualification for teaching in one of their schools to be mastery of content as evidenced by recent refereed journal articles.  If it isn’t refereed, then it doesn’t count.  And if it doesn’t count, then it isn’t rewarded.  Period.  As long as the AACSB tightly rules the academic world of business and accounting, it will be difficult for many business professors to be motivated enough (financially) to crank out a blog.  The ACBSP (accrediting body for smaller colleges and departments of business) also stresses refereed journal articles.

Now, I personally define scholarship as insightful contributions by an expert who has near total command of a subject matter’s content and who has sufficient experience to develop a wise world view that produces thoughts that are of interest to others.  For me, a piece has to be valuable for it to be scholarhsip.  I think there are multiple outlets for scholarship.  A few years back, Ernest Boyer proposed a model with four types of scholarship.  Although Boyer talks about the natural outlet for the scholarship of discovery being publications, he does recognize the potential for other types of outlet.  Boyer’s way of thinking has not yet made it to AACSB controlled colleges/schools/departments of business.  A refereed publication need not contain scholarship but will still count, and non-referee published scholarship does not count.

A second reason for little blogging by accounting academics is that the discipline is dysfunctional after years of control by a network of elite schools that emphasize accountics.  Jean Heck and Bob Jensen provide support for this in their incredibly valuable and insightful paper, “An Analysis of the Evolution of Research Contributions by The Accounting Review, 1926-2005″ in  The Accounting Historians Journal, December 2007.  In their paper, Heck and Jensen chronicle the ascendency and dominance of the accountics model for accounting research and publication.  Accountics has been disastrous for the discipline, because in large part all research has pretty much been bunk, devoid of value to anyone but other accountics researchers.  Prior to the advent of accountics, The Accounting Review regularly contained think pieces.  After accountics, no think pieces were judged to have any value what-so-ever.  Of course, not all think pieces, if they were to be written, contain scholarship   However, the ancient history of academic accouting is that such pieces sometimes contained scholarship of the highest level.

A final reason deals with the conservative nature of most accounting professors.  Accounting professors have been described as the most traditional and conservative group of faculty in the entire academy.  Such professors are naturally resistant to change.  This resistance to change is regularly seen by the continued use of archaic instructional approaches that have been debunked by the learning centered approach. Never-the-less, almost all accounting professors continue to use the old ways of teaching.

I think that the acadeic discipline of accounting could be amazingly transformed if more accounting professors started blogging.  Medicine has its list of top 50 blogs, and Law has its top 100.  Accounting only has ten blogs in total.

Over and out – – David Albrecht

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In this essay I explain why I blog and list all the other accounting professors who blog.  There aren’t many.

I posted my first blog entry nearly four months ago, on September 3.  At long last I have joined a very popular trend, professors who blog.  Fifty posts/essays later, I’m more committed than ever.

blogkeysWhy didn’t I do it before?  Ignorance.  Until just recently, I didn’t even read blogs.  RSS feed?  Don’t even know what that is.  Just give me a journal or magazine article that I can conveniently cite when I write a journal or magazine article of my own.

I finally realized that I’ve been blogging for quite a while.  How so?  About 1,000 accounting professors belong to an e-mail list called AECM (Accounting Education using Computers and Multi-media).  I’ve been subscribed since the get-go.  The list currently generates 30-60 e-mail posts per week on a variety of topics.  Bob Jensen (emeritus of Trinity University) sends more than half. That’s OK with most of us.  He is a prolific web surfer.  He usually finds interesting articles that in some way relate to either accounting or accounting education and sends in links to them, sometimes accompanied by either his opinion on it or a series of questions designed to get us thinking.  After about 10 years of this, those who don’t like to receive so many e-mails or so many of his e-mails have left the list.

I don’t lurk.  This apparently means I don’t mind embarrassing myself if I send an e-mail to the group.  Over the past few years, whenever attending a conference I’d usually meet someone who liked reading my posts to the list.  Hmmm, I have an audience.  It’s best never to admit that to a professor.  So, I’ve slowing been increasing the rate of my submissions, and over the past year I might have sent in 200 e-mails.  That was too much for both me and the list members.  At the last conference I attended, a friend came up to me and said, “I think of you every day, when I open my e-mail program and see that you’ve filled it with so much crap.”  Although he might have been trying to be funny, I still winced.

Sending any unsolicited e-mail, let alone too much of it, is definitely not the way to keep friends and influence enemies.  So it is off to the world of blogging that I go.

Why should a professor blog?   See the next essay, Why Accounting Profs Should Blog, to find out.

Here is a listing of accounting professors that are using blogs or in some cases, have used blogs.  The ten current bloggers differ greatly from each other.  However, they all have something in common:  They have something to say that can no longer be bottled up.  I recommend that you bookmark them all.

  • The Accounting Onion (USA) – retired Thunderbird professor Tom Selling.
  • Andy’s Teaching and Learning Blog (USA) – tenured instructor and department chair at Edmonds Community College.
  • The AGA Weblog (USA)- Willamette assistant professor Kenneth Smith has written a blog since March, 2008, for the Association of Government Accountants.
  • Bob Jensen blogs (USA) – retired Trinity University professor.  Prolific contributor to AECM.  His most relevant blog is Tidbits.
  • Prem Sikka (UK)- Accounting professor at University of Essex blogs at The Guardian (London newspaper)
  • Professor Elam (USA)- University of North Texas at Dallas professor Dennis Elam blogs on every day events from the world of business, linking them to the classroom.
  • Professor Gerald Trites (CAN)- (FCA, CA*IT/CISA) is a Professor of Accounting and Information Systems at St. Francis Xavier University in Nova Scotia. He was the first Director of the Gerald Schwartz School of Business Administration and has served as Chair of the Department of Information Systems.  Maintains Canada XBRL Blog.
  • Really Engaging Accounting (USA)- Central Florida accounting professor Steve Hornik.
  • The Summa (USA)- commentary on Financial Reporting and related matters by David Albrecht.
  • Tick Marks (USA)- an Austin Peay tax accounting professor, Dan Meyer, that has blogged continuously since 2005. When blogging about accounting, his posts focus on tax (surprise, surprise, surprise) and personal finance. He also blogs about accounting students.

Here is a review by accounting students who blog

  • CPA Pledge: Accounting student Jim Chapman chronicles his experience at Central Connecticut University. Is currently centered around studying for the CPA exam.
  • NJSCPA Exam Cram Blog: Recent College of New Jersey grad Priscilla Jenkins, has blogged since July, 2007, about studying for the CPA exam. Is sponsored by New Jersey Society of CPAs.

Dormant academic blogs

Over and out – – David Albrecht

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I just finished the semester and now it’s Christmas Eve.  It’s been a difficult fall–three courses (one for the first time), trips to five schools, and just getting by.  Now it’s Christmas, the most wonderful time of the year.

Today’s post is in three parts.  Part one deals with an idle thought:  the importance of a single currencly to IFRS.  The second deals with economists and accounting.  The third is a new Christmas song.  Well, here goes.


Should there be a common currency for IFRS statements?

Which currency should be used for international financial statements?

Which currency should be used for financial statements based on IFRS?

The purpose of IFRS is to make it possible and easier to compare financial statements between two companies.  It seems to me that comparability would be enhanced if all financial statements were denominated in the same currency?  N’est-ce pas?

Let’s say a Zimbabwe investor is mulling over agri-products companies from Argentina and the U.S.  One set of financials is denominated in Argentinian pesos (ARS), the other set is denominated in U.S. dollars (USD).   Wouldn’t it be beneficial to that investor to have the numbers in the same currency?

If the financial statements are not denominated in the same currency, then what must the Zimbabwean do to make side-by-side comparisons?  Convert them to the Zimbabwe dollar (ZWD) using XBRL?  Common size them? A common sized financial statement in once that has been converted to percentage format.  A balance sheet has all amounts presented as a percentage of total assets.  An income statement has all amounts presented as a percentage of total sales revenue.  I don’t know how to common size a statement of cash flows, never even heard of anyone doing it.  Likewise, I don’t know how to common size a statement of changes in stockholders equity.

What about all of these companies adopting IFRS?  If no one currency is deemed as standard for all financial statements, then the financial statements might very well be presented in a standard, common-sized format.  Or not.  What do you think?


Economists and Accounting

Are you an economist that has told a joke about accounting?  You can be sure that accountants return the favor.

An economist tells this story:

An accountant is on-site, interviewing for a job.  An HR person asks a test question, “Two plus two equals which number?”  The accountant replies, “What do you want the answer to be?”

An accountant tells this story:

A chemist, engineer and economist are marooned together on a desert island, with no food to eat except a few cases of canned peaches.  Unfortunately, there is no way to open the cans.  The engineer constructs a system with rocks and ropes, but only manages to smash the can and scatter all the contents.  The chemist also fails when his concoction of sand, rocks, mud and water does not disolve the top of a can.  The economist saves the day, however, because he assumed he had a can opener.

What do economists really think about accounting?  In “An Accounting Primer:  For Economists’ Eyes Only!” by Judy Laux, a statement is made that:

Economists … treat accounting with disdain.  Having never studied accounting, some economists see it as a poor cousin of a more intellectual discipline.  Down deep, perhaps they believe the stereotypical bean counter, more comfortable with numbers than concepts, plays no meaningful role in the discourse about resource allocation.

In “Accounting as the master metaphor of economics,” by Arjo Klamer and Donald McCloskey, it is said that economists generally shun and scorn accounting and its ideas.  I’ve certainly felt this scorn.  I’ve heard it said, “The specifics of accounting rules don’t matter, financial statement numbers are just numbers and don’t mean much. ”  Ouch!

Fast forward to IFRS vs. U.S. GAAP.  Doesn’t it sound as if the reasons advanced for supporting IFRS are spoken by an economist?  I’m pretty sure, although I can’t get an economist to fess up, that any difference in accounting standards is seen as inconsequential and trivial.  But not so to an accountant, who believes that a devil lives somewhere in the details.

devilinthedetailsFor example, an economist might say that there is, or should be, an international financial market for capital.  An accountant would say that there are several financial markets for capital, country by country. An economist would say that a stockholder can sell off stock in the secondary market part of the world financial market.  An accountant would say that the stockholder can sell off the stock in any exchange in which the company is listed, such ase NYSE, AMEX or NASDAQ, Stockholm, London, Tel Aviv, etc.  An economist would say that company assets should be accounted for, and accountants are good at that sort of thing.  An accountant would start talking about historical cost, amortized historical cost, fair value and balance sheet or off-balance sheet accounting.

Economists argue that one world-wide set of accounting standards should make it as easy for a company to raise capital from Zimbabwe or New York.  An accountant says, “Hold on a minute, Ace.  It isn’t that easy.  The devil is in the details”


I-F-R-S Coming To Town

apologies to J. Fred Coots, Henry Gillespie

You better watch out
You better not cry
Better not pout
I’m telling you why
I-F-R-S coming to town

It’s making a list,
And checking it twice;
Gonna find out Who’s using GAAP.
I-F-R-S coming to town

It sees you count in Boston
It knows you report in Toronto
He knows if you’re using rules or not
So use principles for goodness sake!

You better watch out
You better not cry
Better not pout
I’m telling you why
I-F-R-S coming to town

i-f-r-s-comingtotown

Over and out – – David Albrecht

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Very interesting, indeed.

obamalobbiedtosupportifrsPrior to election day, there was little conjecture as to the impact it would have on accounting.  Oh, some things were clear.  McCain had made his opposition to fair value accounting a campaign issue, even during the prmaries.   But what about the biggie:  U.S. GAAP or IFRS.   Would the multi-trillion dollar have an impact on the election?

I reasoned that McCain eventually would support GAAP because of the fair value issue.  He would be reluctant to support IFRS because of the IASB’s commitment to fair value.  He would value retention of American accounting standards if for no other reason.

I reasoned that Obama eventually would support IFRS.  He would support IFRS because (1) his economic advisors have little respect for the value of accounting nuances and in the past had come out strongly for IFRS, and (2) he would outsource certain American practices to European allies, practices unpopular on the world stage.  If he supported downsizing the military and withdrawing from unpopular (from a world perspective) Middle East entanglements, then would he support outsourcing American standard setting because American practices are unpopular internationally?   I said yes.

Throughout the election, I looked for clues.  I queried the campaigns, receiving insults from Obama and silence from McCain.  Nothing definitive.

So, on AECM prior to the election, I predicted that that Obama would support IFRS when elected.  Since the election, Obama has not disappointed on the IFRS front, naming an IFRS-friendly SEC chair and making promises to radically modify regulation of securities markets.

Of course, I’ve written extensively on how the big accounting firms support IFRS because they stand to profit so obscenely.  Could there possibly be a link between Obama and big monied interests on the issue of accounting standards?   Sadly, it seems the answer is yes.

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One of the courses I teach is Intermediate Accounting 2. This semester’s paper assignment is to take a position on whether the U.S. should adopt IFRS or retain its GAAP. To improve the quality of papers I receive, I instituted a system of peer review, requiring each paper to go though two rounds of double non-blind review. The end result was 51 pretty good papers (39 for GAAP, 11 for IFRS, 1 for both). I’ll be posting the four best. This paper is by by R. J. Segovia, a senior in business with a concentration in accounting.

Missing The Target:

Convergence Replaces Improvement

by R. J. Segovia

“The appraisers are still in the old world,” (Aflalo, 2008) remarked Rozanski, Chief Executive Officer (CEO) of Delek Real Estate. Apparently the “old world” is anything except for the International Financial Reporting Standards (IFRS); which includes United States (US) Generally Accepted Accounting Principles (GAAP).  So it seems now that the “Old World” is in the “new world” and the “New World,” or at least the US financial sector of the “New World,” is in the “old world.”  While many would state that the US should not retain GAAP but instead switch to IFRS in efforts to join this new world, I completely disagree with this stance.  The US should retain GAAP and not switch to IFRS because the lack of acknowledgment that IFRS and GAAP are more different than similar will negatively affect companies immediately.   It is well known that US GAAP has extensive guidance and this is exactly what US companies need.  The recent focus and push for convergence rather than the improvement of accounting standards departs from moral and ethical logic (which has faded away and been forgotten) while inferior financial reporting standards are creeping their way into the US financial system.  The analysis of such statements must be thorough so that CEOs in the US are not found repeating the words of Mr. Rozanski who said, “we do not know what the company’s [net] profits are” (Aflalo, 2008).

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