Now we’re to change the entirety of accounting!

A lot of yesterday was spent on work I have been doing seeking to reconcile financial accounting as it is right now with the demands of climate change. The work has been done at the invitation of Rupert Read at the University of East Anglia and Aled Jones of Anglia Ruskin University. And, in a nutshell, I have not been able to achieve that reconciliation.

I will publish more on this next Thursday when I will be making a presentation on this issue at the Institute of Chartered Accountants in England and Wales. For now suffice to say that accounting as it now cannot survive if we are to bring the impact of climate change within it. Quite literally, IFRS accounting and accounting for climate change are at such odds with each other that only one can win, and it has to be the need to account for the consequences of climate change.

It’s actually very simple indeed. Stick on a carbon tax of the right social cost of carbon. All prices in the economy now reflect climate change, costs, benefits and risks. Thus all accounting done at market prices includes climate change.

This is rather the point of the carbon tax, that by the one change in market prices we’ve now incorporated climate change into every decision.

34 comments on “Now we’re to change the entirety of accounting!

  1. People used to go to Bedlam to be amused by the antics of the poor inmates. Mr Murph, I suppose, has volunteered to replace the capering lunatics.

  2. Brilliant by Tom. I know Arthur Cecil, Dieter, William, Paul and Nicholas have said it too, but it’s the way you say it.

  3. Define ‘climate change.’

    It is meaningless. A political construct.

    BUT WE’RE GOING TO FIX IT !!!

  4. What are these supposed consequences of climate change? Apart from hoards of Chicken Littles running around with their heads on fire and witless politicians pandering to their hysteria with huge amounts of taxpayers’money, I’m not actually aware of any.

  5. 16th century, Pacioli invents double entry bookeeping

    21st century, Murphy invents treble entry bookeeping

    What’s next for this polymath – a square wheel?

  6. Quite literally, IFRS accounting and accounting for climate change are at such odds with each other that only one can win, and it has to be the need to account for the consequences of climate change.

    Were Richard Murphy a less than completely incompetent accountant he would understand the obvious: IFRS accounting was not designed to capture the sort of “information” he is looking to capture. IFRS accounting will not (and cannot) capture externalities. And that isn’t a bug, it’s a feature. It’s what makes IFRS accounting useful to its users.

    It’s why the concept of external costs was developed and why external cost economics exists. Traditional accounting cannot capture that sort of information. Were Richard Murphy less ignorant of economics, he’d already know this.

  7. Rupert Read has a Ph.D. in Philosophy.
    Aled Jones has a Ph.D. in Cosmology.

    So neither has any formal training in accounting or economics.

    Which neatly explains how they ended up choosing to work with Richard Murphy.

  8. I will publish more on this next Thursday when I will be making a presentation on this issue at the Institute of Chartered Accountants in England and Wales.

    Lucky them. I assume the chartered accountants of Scotland and
    Northern Ireland have better things to do.

  9. “So neither has any formal training in accounting or economics”

    Or science in the case of the former….

    Whenever there’s a climate story, the local rag & the Beeb ALWAYS refer to “Dr” Rupert Read – as if that title somehow makes him an expert on the subject. This idiot is heavily involved with Extinction Rebellion, and often speaks about his “colleagues” at the UEA Climate Research Unit, who appear to fill his head with the sort of scaremongering guaranteed to keep their grant money rolling in…

  10. I assume the chartered accountants of Scotland and
    Northern Ireland have better things to do.

    You can safely assume that the ones who attend are either as stupid as Murphy or have an accounting career that’s about as successful as Murphy’s.

  11. If a carbon tax were to be spent on adaptation, then there might, just, be a point to it. But it won’t, so we shouldn’t levy what would be a sore temptation to bad government.

  12. Dear Mr Murphy

    I have a similar problem. I have a really expensive hammer made from the finest metal but no matter what I do I just cannot get satisfactory results when dealing with screws.I have consulted various experts, but they rather unhelpfully, merely remark that I am a soppy tosser.

  13. Stick on a carbon tax of the right social cost of carbon dioxide

    FTFY

    Correct social cost of C02 = £0.00

    Easy isn’t it?

  14. If you have a load of lowland property and you think it’s going to be worthless in 20 years due to rising sea levels or require expensive remediation then there’s nothing wrong with including that in your accounting valuation provided of course you have reasonable backing to support this and expected costs etc. (Which I imagine is the sticking point in that he wants to include
    Imaginary costs).
    On the other hand the fact the govt will build a new flood defence system near you is not a cost unless it’s put an additional levy on local property owners to pay for it in which case you account for the charge.
    You could easily account for writing down your fleet of ICE vehicles due to the switch to electric, but you’d need market prices to show that, if there were penalties for early lease termination as you had decided to switch early then those would be accounted for
    So lots of ways climate change can get into the accounts providing there is actually some form of real assessable costs to the business.

    There have been many discussions over the years about externalities as mentioned above and they don’t belong in ‘traditional’ accounting as already noted, if for no other reason than they would be very open to interpretation and open to abuse.

  15. “Correct social cost of C02 = £0.00

    Easy isn’t it?”

    Can’t be too easy since you got it wrong.

    The cost is negative, i.e., use of fossil fuels has massive BENEFIT for Man. We’d be neolithic without it. Hence 7,000,000,000 people would die. Yet these yahoos, including Timmer, want to talk about the ‘social cost of carbon’ (sic).

    Let’s put a tax on that which keeps us alive! BRILLIANT!

  16. I will be making a presentation on this issue at the Institute of Chartered Accountants in England and Wales

    Attending this presentation carries a penalty of -20 CPD points.

  17. If a carbon tax were to be spent on adaptation, then there might, just, be a point to it. But it won’t, so we shouldn’t levy what would be a sore temptation to bad government.

    Or reduce other taxes, but we all know that won’t happen.

    I quite like the idea I heard from a US economist, but I can’t remember who or where, which is basically levy a carbon tax and then every year send everyone a cheque = to the amount that has been collected. The poor are likely to be winners eventually.

    Of course lots of detail and as its a lagging payment it won’t offset the early gains so won’t be popular to start with.

  18. ‘A lot of yesterday was spent on work I have been doing……’

    All of one day, wonder if that includes the time to create the presentation or not

    I wonder how much research he did a quick google search found me a report on the subject from 2 years ago…..

    “The Task Force on Climate-related Financial Disclosures (also known as the “Task Force” or “TCFD”) was set up by the Financial Stability Board (FSB) in 2015.
    In June 2017, a series
    of recommendations (“Recommendations”) was issued to address gaps in the information disclosed on the financial impact of climate risk across the investment chain.”

  19. Doesn’t he live somewhere flat? Maybe he’s worried about flooding but can’t afford to move.

  20. If Ely was washed away in a flood, would anyone notice? If so, how many weeks would it take?

  21. How delightfully decadent, to rail against that which keeps you alive.

    If you win the fight against ‘climate change,’ you die.

  22. It was amusing to see an article on BBC about massive ice loss next to a new study that showed hyenas used to live in the arctic

  23. The work has been done at the invitation of Rupert Read at the University of East Anglia

    Let’s not forget that the University of East Anglia is front and centre of the global warming scam, being the source of the notorious Climategate emails which did so much to expose the corruption of science.

    Rupert Read is an academic and a Green Party politician in England. He is Chair of the Green House thinktank, a former Green Party spokesperson for transport…

  24. Why are we in the west arguing about a carbon tax? We already have one. UK fuel duty is 58p/litre (https://www.gov.uk/tax-on-shopping/fuel-duty), that’s on top of standard VAT and all the other government taxes. Which works out at over £200 per tonne of CO2 emitted, and no-one is suggesting a ‘carbon tax’ needs to be that high to account for the ‘costs’ of AGW.

  25. Rupert Read has a Ph.D. in Philosophy.
    Aled Jones has a Ph.D. in Cosmology.

    Slightly unusual – they are usually Sociologists, but the BBC/Guardian etc represent them as subject experts.

  26. Murphy jumps the shark

    “And they claim that my opinion is wrong, because most economists disagree with it. This is, of course, a situation I am familiar with. On MMT, the tax gap, tax havens, QE and much else I am wrong. Except I seem to continually be right and economists, with their intensely narrow minded and frankly unreal view of the world, are proved to be wrong.”

  27. Rupert Read has a Ph.D. in Philosophy.
    Aled Jones has a Ph.D. in Cosmology.

    What discipline is tater’s PhD?

  28. In addition to the carbon tax we need a shit tax.

    All the farmers that bring food to town should be charged and taxed for the extra shit their products will cause as the consumers of their products add to the local sewage works.

    So, no food products sold, no shit produced, no clogged up sewage works!

    Simple If you just apply carbon tax and take it to its logical conclusions.

  29. “And they claim that my opinion is wrong, because most economists disagree with it. This is, of course, a situation I am familiar with. On MMT, the tax gap, tax havens, QE and much else I am wrong. Except I seem to continually be right and economists, with their intensely narrow minded and frankly unreal view of the world, are proved to be wrong.”

    Lol. The most Murphy paragraph ever, except it is lacking the ‘Firstly’…’Seventh’ bits.

  30. “If Ely was washed away in a flood, would anyone notice?”

    Ely is unlikely to be washed away – it’s on one of the few bits of high ground in the Fens. That’s why it’s called “The Isle of Ely”. However, if it WAS, anyone within 20 miles would certainly notice the lack of the Cathedral spire…

  31. @Gamecock June 22, 2019 at 8:30 pm

    Social Cost of CO2* (aka plant food) is zero

    Benefit of fossil fuel is not a negative cost; does gas/petrol station pay you to fill-up?

    Next you’ll be saying the Sun, Moon, Tides, Rain, Wind, Magnetic North etc should be assigned a value

    * CO2 is now around same level as it was 800,000 years ago: we know because we’re here Earth didn’t explode, all life-forms didn’t go extinct

  32. @BiND June 22, 2019 at 8:49 pm

    levy a carbon tax and then every year send everyone a cheque = to the amount that has been collected

    After administration costs deducted… but, but, but “we created 10,000 jobs in our new Refund Dept in it’s state of the art £3billion climate neutral powered by wind Refund Campus”

    Techie on Faceberk, Twatter and Youtub looks at figures “Err, the electricity consumption of the Refund Campus is 50% higher than all USA wind power” – accounts terminated for breaching Community Standards.

  33. With all due respect to everyone (and expecting Chris Miller to throw a ripe tomato at me in November) what the ?!? does anyone think this is?
    Acounting looks at the past, actuarial work at the future so pea-brained accountants like Murphy are not equipped to look at the effects of any future changes (including climate ones).

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