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Posts Tagged ‘Income smoothing’

On Developing a Worldview is proving to be a blog essay with legs.  It’s time to reveal the impetus for that piece.  In waning days of 2009, I received an e-mail:

Hello Professor Albrecht,

My name is Garrett D.; I am a recent graduate of an undergraduate accounting program currently serving in public practice as an audit associate in the Chicagoland area, and am interested in potentially pursuing a career in accounting academia. I have not applied to any programs as of yet, but am rather looking to acquire a fuller understanding of what it means to become an academic, and an accounting academic in particular. Hitherto, my exposure to this way of life has been limited to Stephen Zeff’s biography of Henry Rand Hatfield, fairly intermittent reading of the Financial Accounting Standards Research Initiative blog, and sporadic digestion of select accounting articles and monographs. Your blog has been of interest to me for a while now, and, upon reading your most recent post, “On Being a Blogging Professor,” I was struck by the emphasis you placed on developing a mature worldview as an accounting academic. Though I might be mistaken, I also recall you discussing the development of a “coherent worldview” as an accounting academic in previous posts. This “worldview development” imperative, alongside an intrinsic interest in education as a process, calling, and as a social phenomenon, is, as far as I can tell, primarily driving my interest in academia.

I am curious, if it is not too much trouble, if you will perhaps aid me in this effort to develop a coherent accounting worldview. Would you mind providing me with a recommended reading list of “accounting essentials” to add structure to my excursions within this discipline?

Thank you for your consideration.

Kind regards,
Garrett D.

Such a well-intentioned request.   I delivered On Developing a Worldview, in which the focus is on the process by which a person can acquire a worldview.  I promised a second essay in which I described the path I took in developing my own worldview.  But I didn’t promise a third essay, offering a reading list so that he could start working on his.  I never said never, I just didn’t say yes.

I delivered (and promised) only in part for two reasons.  First, I immediately saw value in a more general response for readers of The Summa.  I didn’t want to scare anyone off by being too detailed in my first essay.  Second, he was asking for something I didn’t have on hand.  So I shirked.   After I published On Developing a Worldview, Garret wrote back:

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Am I going overboard?  I hope not, hate getting wet.  Let’s see what Dennis Beresford, former chairman of the FASB and current accounting professor, has to say about my previous post.  Denny is quoted from AECM, the international listserv for accounting professors.  On Thursday, November 27, 2008, he says:

Dennis Beresford, former Chairman of FASB, now accounting professor at University of Georgia

Dennis Beresford, former Chairman of FASB, now accounting professor at University of Georgia

Last year I had Julie Erhardt speak to my graduate accounting classes and meet with some of our accounting faculty. Julie is the SEC Deputy Chief Accountant in charge of all of the international accounting effort. One of the faculty members asked about how we could teach IFRS on top of U.S. GAAP. Julie gave what I thought was a very interesting and insightful response.

Julie said that perhaps we could change our approach to financial accounting to one in which most of the focus in the first place was on business issues.  For example, if covering lease accounting, the instruction could begin with the differences between buying and leasing an asset, what are the economics of doing one vs. the other, and what would be the effects on financial statements of capitalizing leases vs. expensing lease payments as they are incurred.  Then the coverage could move on to the fundamental principles that determine whether leases should be capitalized or not e.g., how much of the fair value is covered by lease payments. Only after the economic issues and the basic principles are covered would some of the details (e.g., what to do with contingent rentals) that distinguish IFRS from GAAP be mentioned. In this approach, about 50% of the effort would be on the economics, 25% would be on the principles (that ought be to pretty similar), and 25% on the rules (that could be different).

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