Accounting Isn’t Cool Because Andersen Made It “Midwestern,” Non-Elitist, Says Guy

Posted on by Adrienne Gonzalez

Colin hid this in ANR but it's worth dusting off and setting on the mantle where we can all stare and admire it for what it is.

Jacob Soll has written a book called The Reckoning: Financial Accountability and the Rise and Fall of Nations and in it, he explains how accountants were the rockstars of their day back when most of the peasants couldn't even read, let alone count. Those were strange times for civilization but the strangeness didn't hit until a few decades ago, when Arthur Andersen tried to turn accounting into a career you consider while watching back-to-back episodes of Maury Povich.

Bloomberg interviewed him about the book and this happened:

Hoelterhoff: No shortcuts. I love the portraits you include of accountants in your book. They had stature in society. What happened?

Soll: In the 1960s, in the U.S., it was still a sought-after job. But I think Andersen, by taking accounting out of the Ivy League schools and making it Midwestern and non-elitist, in some ways damaged it culturally. It was no longer this elite thing.

Hoelterhoff: Enron and the scandals over the last 30 years didn’t help.

Soll: Who paints an accountant today? Yet, a lot of the great Botticelli paintings are actually of accountants who were around the Medici firm.

I'm sure many of you could still argue that you have stature, given that we live in a consumer society and most of you can afford the crap that tells your neighbors you have money. Then again, I have a big screen TV too, so….

Besides, who paints ANYONE today? When was the last time you saw anyone other than a liberal arts bro in need of beer money posing for an art class? I'm sure plenty of you have stick figure masterpieces of yourselves hanging on your own fridge, does that not count?

Related Posts

The FASB Punts Repo Accounting to the SEC

It’s not surprising that FASB’s Bob Herz was called to submit comment on the House Financial Services Committee’s hearings on Lehman – more specifically, Public Policy Issues Raised by the Report of the Lehman Bankruptcy Examiner – and it’s even less surprising that Herz stated that the FASB will be ready when the SEC is to alter repo accounting rules should this be, you know, a big deal going forward.

As many of you already know, the FASB has a history of taking a reactive stance to accounting issues during the financial crisis (case in point: mark to market) and repo accounting is no exception. Sort of like the SEC cracking down on Madoff-esque Ponzi schemes after Madoff, it defeats the purpose as financial criminals very rarely repeat techniques that have already been uncovered and prosecuted. But oh well, showing up late to the party is still showing up and proves FASB is at least paying attention.


Herz’s testimony reinforces FASB’s position as standards setter, not regulator. Working with the SEC will allow the regulators to put together a case for accounting standards that could address repo accounting should the SEC discover it is widespread among financial firms but for now, FASB will be sitting back and waiting to see what the SEC comes up with.

As it turns out, FASB isn’t nearly as reactive as it appears on the surface: plenty of guidance already exists for handling these transactions and perhaps had Ernst & Young been looking hard enough, they would have easily found something amiss.

Said Herz:

When developing the guidance for determining whether a company maintains effective control over transferred assets, the FASB noted repo transactions have attributes of both sales and secured borrowings. On one hand, having a forward purchase contract is not the same as owning the asset. On the other hand, the contemporaneous transfer and repurchase commitment entered into in a repo transaction raises questions about whether control actually has been relinquished. To differentiate between the two, the FASB developed criteria for determining whether a company maintains effective control over securities transferred in a repo transaction.

Control? Is that was this about?

Regardless, FASB is prepared to offer even more guidance on the matter should current guidance not be sufficient to make sense of future contracts that could be used in a fraudulent manner. Of course, the financial criminals have likely already discovered a new, innovative way to hide liabilities or stash nasties off-sheet but instead of looking for those, the SEC will be working closely with FASB in the future to prevent another Lehman. History always repeats itself but, sadly, financial crimes rarely do. It appears our friends at FASB never got that memo.

Source: Discussion of Selected Accounting Guidance Relevant to Lehman Accounting Practices

FAF Chairman Isn’t Interested in the FASB Taking a Backseat in Accounting Rulemaking

In a November 15 letter to the SEC, FAF chairman John J. Brennan wrote that reducing FASB’s role in setting U.S. financial reporting standards “may weaken the positive leverage that U.S. GAAP and U.S. standard setting have provided to improving accounting standards for investors in the world’s most robust and transparent capital markets.” The FAF also disputed the SEC staff’s proposed goal of achieving one set of global accounting standards. Instead, the organization feels that “a more practical goal for the foreseeable future is to achieve highly comparable (but not necessarily identical) financial reporting standards among the most developed capital markets that are based on a common set of international standards.” [CFO]