Work-Standard Accounting Practices: Accounting Standards (Pt. I of II)

Much like the concept of a national educational system, contemporary understandings of the Accounting Profession are a byproduct of the two World Wars and the Great Depression. The Accounting Profession found itself pressed to assist in the allocations of their nation’s resources toward the war effort. Everything from individual units of currency to the amounts of resources required to manufacture materiel fell under the purview of the Accounting Profession. In a way, the Accounting Profession itself represents the fundamental contradiction between the State of Total Mobilization and the State of Natural Rights that the former is still trying to overcome. This contradiction persisted throughout the 20th century and was fundamentally reshaped by the conditions introduced by the Death of Bretton Woods.

The Death of Bretton Woods affected the Accounting Profession as much as it did to the Fractional-Reserve Banking System. While the latter contended with the abandonment of the Gold Standard and the rise of Financialization commensurate with Deindustrialization, the Accounting Profession remained split between the Western Bloc countries and the Eastern Bloc countries. Barring the Eastern Bloc countries, which relied on accounting standards more in line with Marxism-Leninism, the Western Bloc countries sought to implement an accounting standard that was in line with Neoliberalism. The proposed accounting standard would be worldwide in scope, adopted for use in all economic and financial activities within the Empire of Liberty or the Liberal International Economic Order (LIEO). Since the German-speaking world after 1945 is no longer an hegemony, its significance to be made apparent in Section Two, it is unsurprising that most pivotal developments in Liberal Capitalist accounting practices occurred in the English-speaking world.

In 1973, Sir Henry Alexander Benson, Baron Benson, established the International Accounting Standards Committee (IASC), which was in final analysis a sort of Non-Governmental Organization (NGO) tasked with establishing a uniform set of accounting practices for Liberal Capitalist regimes. The multiplicity of accounting practices employed by various nations prior to the Death of Bretton Woods warranted the need to develop standardized accounting practices. It was an international convention of the Accounting Profession across various Western and non-Western countries, the purpose of which was to establish “International Accounting Standards (IAS)” that Parliamentary Democracies, Market/Mixed Economies, and Fractional-Reserve Banking Systems would employ and provide more reliable financial data between themselves and Inter-Governmental Organizations (IGOs) like the IMF, the World Bank, the European Union (and its precursor, the European Economic Community), and the OECD.

From its inception in 1973 to its dissolution in 2001, IASC presided over the IAS and set the basis for contemporary accounting practices throughout the Western world. Its membership consisted of national organizations representing the Accounting Professions of mostly Western countries. The size and composition of the NGO was ultimately dependent on the Accounting Profession of which nation had the most clout and influence over the Financial Markets and Fractional-Reserve Banking Systems after the Death of Bretton Woods. As Financial Technologies, Globalization, and Deindustrialization accelerated around the 1980s, the American Accounting Profession would take greater precedence over the Accounting Profession of other Liberal Capitalist regimes.  

In 1983, the Liberal International Economic Order (LIEO) formed the International Organization of Securities Commissions (IOSCO), an international commission responsible for the regulation of LCFIs (Liberal Capitalist Financial Instruments) across Liberal Capitalist regimes. This IGO represented the various regulatory agencies throughout the LIEO such as the American SEC (Securities and Exchange Commission). IOSCO would eventually encourage IASC to expand the IAS to include financial reporting of LCFIs at Financial Markets, rather than just the economic activities of Market/Mixed Economies or the governmental activities of Parliamentary Democracies. As the worldwide center of gravity for LCFIs became situated in the US, specifically in New York’s Wall Street, the IASC would later attempt to bring its IAS more in line with those of the American Accounting Profession. The American Profession’s implementation of IAS, the “Generally Accepted Accounting Principles (GAAP),” was adopted by the Securities and Exchange Commission (SEC). To gain the approval of SEC, the IASC brough its IAS in line with accounting practices commonly associated with the American Accounting Profession.

It should be noted that the revisions, while initiated in the late 1980s (around 1987 and 1988), it was until the late 1990s that they were finally implemented. IASC would continue to exist until 2001, when it was superseded by a successor, the International Accounting Standards Board (IASB). The IASB also inherited the IAS, which would later undergo subsequent developments to become the “International Financial Reporting Standards (IFRS).”

There can be no doubts that the Accounting Profession, like the Fractional-Reserve Banking System and the Financial Markets, was shaped by the economic history of the late 20th century and the early 21st century. The collapse of the Eastern Bloc countries and the Soviet Union meant that Marxist Theory lost whatever foothold it still had within the Accounting Profession. In fact, aside from Marxist Theory, no other ideology besides Neoliberalism has been making any serious contributions to the Accounting Profession. The consequence of this is that the fate of the Accounting Profession was impacted by a lot of terrible accounting mistakes and scandals in the 2000s.

The Accounting Profession was seriously impacted by the 9/11 Attacks. The US, in conjunction with the LIEO, implemented many financial reforms with the goal of preventing the Fractional-Reserve Banking System and Financial Markets from sponsoring terrorist activities. Curtailing “terrorist financing” and “money laundering” between terrorist groups became important initiatives for IOSCO and the IASB.

But 9/11 itself was not the only incident in the early 2000s that compelled IOSCO and IASB to seriously consider reforming the Accounting Profession. Aside from the People’s Republic China’s entry to the World Trade Organization (WTO), the early 2000s also saw the infamous Worldcom, Enron, Parmalat, and Vivendi scandals. An argument can even be made that the Great Recession had forced additional reforms of the Accounting Profession and its interactions with the Fractional-Reserve Banking System. The IOSCO would later author the “CPSS-IOSCO Principles for Financial Market Infrastructures” in 2012 with the Bank of International Settlements (BIS).

The purpose of discussing the recent history of the Accounting Profession is to demonstrate how the procedural practices of the Accounting Profession can be influenced by an ideology. Unlike the economic activities that its members record on a daily basis, the Accounting Profession is governed by rules and regulations that are decided and acted upon at either the national or international level. The methodologies of the Accounting Profession can become nationalized to such an extent that they reflect the methods employed by the accountants of a particular nation.

The worldwide adoption of a particular accounting practice represents the introduction of values reflecting the National Consciousness of the nation that developed it. It goes back to an important argument discussed earlier in the Treatise, which is the belief that without any contextual meanings behind the numbers on a financial ledgers, the numbers themselves become arbitrary and abstract. Here, the implication of this realization should be obvious: is it possible to devise an accounting standard that does not embody the Weltanschauung of Neoliberalism? Clearly, Marxism-Leninism was arriving at similar conclusions in the 20th century, even though its 21st century adherents have lost sight of this fact.  

What I am trying to imply is whether some other ideology besides Marxism-Leninism is capable of imparting its Weltanschauung to the accounting practices of the Accounting Profession whilst still retaining some basis in mathematic reality. Are there any ideologies out there in the world that have made their own strides? One might argue that Feminism and Environmentalism were arriving at comparable conclusions around the late 20th century, but they, Marxism-Leninism and Neoliberalism cannot be the only one worthy of mention. For other ideologies, the solution has to come in the form of completely distinct accounting practices, an endeavor already being pursued by Cryptocurrencies, as evidenced by the concepts and principles found in Blockchain Technology. But for ideologies that find Cryptocurrencies to be unattractive, repulsive or even incompatible with their own understandings of finance and currency, an alternative accounting practice is the only way forward.   

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