The economy has clearly changed. Intangibles dominate the global economy but accounting practice hasn’t kept up. As a result financial statements don’t show what is actually creating value (intangible assets) or those things that could lose value (intangible liabilities, such as climate risk).
As Alfred (Michael Caine) says to Batman (Christian Bale) in The Dark Knight: 'Some men aren’t looking for anything logical, like money. They can't be bought, bullied, reasoned or negotiated with. Some men just want to watch the world burn.'
Ultimately the fact that there is a gender pay gap is the result of decisions made, no doubt by men, based on a belief that motherhood isn’t as valuable as earnings for the company. And balancing gender pay (over time) is similarly a decision, able to be made, by men, who are choosing not to make it. Call it a conscious decision not to make a decision. Now that the gender gap has been exposed, how can the decision to balance it be enabled?
Economists were underprepared to deal with the pandemic shutdown. Neoclassical theory is no longer relevant. Normative Theory links capitalism to social norms. Normative Economics and Normative Accounting more closely align capitalism with the realities of the 21st Century.
Management tools result in balance sheets that are of limited relevance and a proliferation of non-financial reporting initiatives. Surely financial statements should represent commercial reality?
Balance between the balance sheet and the income statement is vital to represent a company's longer-term performance. Particularly as they pivot to green energy futures and invest in environmental strategies to ensure that future.
Are modern day accountants hindering our economic, environmental development and recovery?
How companies can actually profit in the transition to Net Zero - a win:win for society. Accounting is key. Normative Accounting strengthens shareholder equity and helps build a Green future.
The Prince of Wales has thrown down the gauntlet: inviting business leaders to sign “Terra Carta”, an Environmental Charter that will unite business leaders around the world harnessing “the irreplaceable power of nature”.
You can draw a line in the historical sand: almost pinpoint the date when globalisation ceased being broadly progressive and became crudely self-serving.
Only by making fundamental changes to financial reporting and broadening our measures can we release the iron grip that financial statements have on corporate priorities and decision-making.
Getting the economy back to pre-COVID normal is neither possible, nor is it desirable.
I am sure it was not intended, but the Pandemic has exposed a nasty reality: there is no shortage of money.
Capitalising social and relational capital assets would, by the very nature of double entry bookkeeping, deliver greater corporate profitability and stronger financial metrics across the board, unlocking hidden asset wealth while greatly strengthening investor equity.
Friedman's experiment in extreme laisser-faire economics has led to both ethical erosion and the financial crisis we’re experiencing today.
It is becoming increasingly apparent that economic policy makers have no idea how deep the post-pandemic recession is going to be, or how to implement a practical recovery programme.