An interesting contention

Richard Murphy says:
June 1 2017 at 2:42 pm
Almost universal

If there was a profession that has never understood money, tax, business, profit or commerce accountancy is it

They just follow the rules, unquestioningly

From the man who ignored his economics lectures, completed his accounting ones, in order to become an economic expert.

14 comments on “An interesting contention

  1. He has a point though. I remember once listening to a parliamentary inquiry on the radio where a treasurer or FD of (I think it was) BAe made a technical point that “Depreciation is a Source of Funds” to an incredulous inquiry chairman. Technically speaking, the FD/treasurer was quite right (if you work through how a Source and Use of Funds statement works), but the chairman couldn’t get his head round the concept and neither could the accountant explain to the inquiry why it was the case – it just was, and that was how the rules worked.

  2. The high number of CEOs who were formerly CFOs suggests that a financials background is incredibly useful for understanding money, tax, business, profit and commerce.

    Or in fewer words, Ritchie talks bollocks.

  3. If there was ever a putative accountant who has never understood money, tax, business, profit, commerce or indeed anything, R Murphy is that omninescient man.

    How’s that for universal?

  4. “The high number of CEOs who were formerly CFOs suggests that a financials background is incredibly useful for understanding money, tax, business, profit and commerce.”

    Not so, it just shows that the average businessman coming up through marketing or operations doesn’t understand company financial statements. CEOs and CFOs have to explain the accounts to shareholders. They don’t have to explain their marketing or operations.

  5. Not so, it just shows that the average businessman coming up through marketing or operations doesn’t understand company financial statements.

    Really? In actuality it appears that is exactly why a financial background is incredibly useful for understanding money, tax, business, profit and commerce.

    Might want to think that one through a second time.

  6. And this, having been spanked, chewed and spat out by Kevin Hague, who showed him up to be an ignorant, loud-mouthed idiot, screaming hysterically about something he knew nothing about.

    I suppose a moment’s reflection might result in catastrophic mental damage.

    Oh, wait…

  7. “Might want to think that one through a second time.”

    Have thought it through many times over the years. Assessments of senior management in client companies is a pretty standard part of bank credit assessments.

    CFOs become CEOs in capital intensive businesses that use a lot of finance – property, transport, utilities – but when did you last hear of a CFO becoming CEO of a tech, big oil, engineering or pharma company​? Me neither, because all the accounting savvy in the world isn’t going to be enough to run those companies.

    Sure you get financial CEOs in conglomerates. Martin Sorell is a good example at WPP, but he is essentially the interface to shareholders. Each company in the group largely runs itself, with Sorrels and his head office watching the numbers but not running the day to day businesses.

  8. @geoffers I have had discussions with him regarding specialisation in accounting and that a CIMA qualified accountant might know more than a CA generally speaking, he assured me that he is an expert in Management Accounting and I didn’t know what I was talking about despite my qualifications and experiencep

  9. Accountancy like any profession has people with varying ability, it’s a bit unfair for Murphy to stereotype them all in such a way just because he can’t imagine there are people more skilled and knowledgable than himself

  10. “when did you last hear of a CFO becoming CEO of a tech, big oil, engineering or pharma company​?”

    Around 30% of Fortune 500 CEOs started in finance. More than any other single discipline. The next highest percentage is sales & marketing with around 20%.

    Best to dismiss them all as being heads of conglomerates or whatever. Because if you’re an accountant, they take away all your other skills and abilities. And anyone who isn’t an accountant can do everything.

  11. “CEOs and CFOs have to explain the accounts to shareholders.”

    Cause, like, that’s their only job. They don’t actually have to run the company or anything. Just explain accounts to shareholders. Once a year at the AGM. Probably using a PowerPoint presentation prepared by someone else.

  12. https://www.forbes.com/sites/christianstadler/2015/03/12/how-to-become-a-ceo-these-are-the-steps-you-should-take/#412bfe5f1217

    Pretty much says the same. Most Fortune 100 CEOs are internal candidates who come through the organisation in operational roles. Mostly engineers with MBAs.

    There are a fair number of CFOs who become CEOs but their abilities are generally considered to be limited to financial matters, and no, having a solid understanding of the accounts doesn’t give them a firm grasp of strategy, technology,operations or marketing, so they tend not to get the job where those things matter.

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