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CPAs Aren’t As Optimistic As They Used to Be on the Economy

Straight from the horse’s mouth, or, in this case, the CPAs:

According to the latest AICPA Economic Outlook Survey, chief financial officers, controllers and CPAs in executive and senior management accounting roles are far less optimistic now about the direction of the U.S. economy than they were in the first quarter of 2011.

The CPA Outlook Index, a broad-based composite index that captures the expectations of CPA financial executives and management accountants, declined three points to 66 this quarter, from 69 in the prior period.

“The flush of optimism we experienced earlier this year has given way to more moderate expectations for the U.S. economy,” said Carol Scott, AICPA vice president for business, industry and government. “While the CPA Outlook Index is still positive relative to the dark days of the recession, our members are concerned about rising energy costs and inflation, health care costs and continuing weakness in demand.”

The pullback in optimism follows an upbeat assessment in the prior quarter and signals the two-year-old U.S. economic recovery has lost momentum, Scott said. The survey shows that expectations for corporate expansion and hiring have moderated and the outlook for revenues and profits declined. Concerns about inflation continued to rise, driven by higher energy costs. The outlook for capital spending remained largely flat with information technology the only sector enjoying improvement.

It’s worth noting that while optimism for the US economy declined sharply this quarter, it is still higher than it was for the 4th quarter of 2010. Slightly more than one quarter of respondents (27%) expressed a pessimistic outlook for the US economy, driven by concerns about unemployment, government debt and rising prices.

Check out the full survey here, Valium not included.

Accountants Disgust Charlie Munger on a Multitude of Levels

If you piss off a billionaire, there will be repercussions. And Charlie Munger is not a typical billionaire.

He just so happens to be the BFF and business partner of the second richest person in this fair land of ours and since WB is too busy chasing tail with new friends, he recently felt the need to vent at the University of Michigan about, among other things, accountants and how they failed. FAILED US ALL!

The accountants utterly failed us. And by the way, there’s practically no sign of any intelligent reversal of the failure of that profession. I have yet to meet many accountants who are the least bit ashamed for their contribution to our recent troubles. But it was immense. Imagine when Enron comes down to the SEC and says “we want to write a little contract with A, and a little contract with B, and take all the profit we’re going to make from these complicated contracts over the next 20 years into earnings immediately, and put an asset on our balance sheet of $28 billion from signing two pieces of paper.” And the SEC, led by wonderful accountants who studied at great places, [says] “Why, of course you should have that kind of accounting!” What the hell were they thinking? How can anybody have any respectable understanding of human nature without realizing that the kind of people who were going to be tempted by that accounting were not going to be able to resist the temptations? It was disgusting.

Now you might think this is one of those situations where the old man says to you, “I’m not mad, I’m just disappointed.” This is bullshit. Charlie Munger is definitely pissed. He’s not putting all the blame at the doorstep of accountants but you definitely get the impression that if he could, he would.

But why? Why would Mungsy be so pissed? Why would he lump you in with likes of Jimmy Carter, Ryan Leaf and Andy Barker, P.I. (an accountant, no less)? Basically it’s because you people are a bunch of pansies, will politely nod to the whims of the clients you serve and that you’re a bunch of numbers nerds and that you can barely carry on a conversation with another human being let alone understand that greed trumps Debits = Credits:

Partly the establishment accountants want to please the people who are writing the checks. And partly the academic accountants get full of people who overdosed on mathematics. They want everything to be in balance. And they don’t think that that really isn’t rational when creating rules for a human behavioral system. They’re too mathematical and not rational enough when dealing with their fellow humans. You can’t give the average Wall Street CEO really lenient standards of accounting and expect the figures to be good.

Here endeth the lesson.

Charlie Munger on Communism, Botox, and Goldbug Jerks [Motley Fool]