Erm, why?

If 50% of the world’s investments are going to ethically invested within five years there’s going to be a massive demand for accounting reform

Rilly?

I think there will be a market for sustainable cost accounting.

No one uses sustainable cost accounting to define what is an ethical investment. Therefore, why would more ethical investment mean more sustainable cost accounting?

35 thoughts on “Erm, why?”

  1. Accounting entry is an accounting entry, nothing more, nothing less. The underlying that is being accounted for can be a block of metal or a hi tech computer chip, makes no difference.

  2. “I think there will be a market for sustainable cost accounting.”

    As currently described by Spud, SCA would make most industries insolvent.

  3. Logically, this means 50% of accountants will have to be marginalised transgender disabled BAME pansexuals of colour. Sorry Richard!

  4. Does this mean good stocks will have less value if they fail some ethical test? Does that mean a better PE for those evil stocks compared to the virtuous ones? Well, my ethics would tend to go for the better PE.

  5. Ethical investment? If we’d had that in the 1930s nobody would have invested in Vickers-Armstrong – arms company, you know. Therefore no Spitfire. Similar argument, no Hurricane. That would have altered history – not necessarily to Britain’s advantage.

    The trouble with Ethical Investment isn’t that some people – perfectly reasonably – don’t want to invest in, say, cigarette manufacturers. It’s that you are invited to buy a package deal of lame-brained prejudices dressed in the false garments of reason.

  6. Sustainable cost accounting implies that you can accurately put a price on environmental externalities. What a preposterous notion.

  7. Correct, dearieme.

    ‘Ethically invested’ means third parties get a say in the investment. Hence, ‘ethical investment’ is unethical.

    ‘Ethical’ is just more totalist language.

  8. ‘a package deal of lame-brained prejudices dressed in the false garments of reason’

    Positively lyrical, Dearieme.

  9. Dennis, CPA to the Gods

    Lost in all of this is the obvious: At present there is no such thing as SCA. Spud has proposed it, but as of this point in time there is no precise definition of what SCA is, what it is supposed to accomplish, no framework and no standards.

    Will there be any demand for SCA in five years… or ever? Not unless it is mandated by government. Even if demand emerged, it would take more than five years just to come up with an applicable framework and standards. It would take a few years more for companies (especially large companies) to get their accounting software rewritten or replaced.

    The other thing lost in all of this is that Spud, in reality, doesn’t know a thing about cost accounting on a practical level. From what we know about his professional background, it is almost certain that he has between very little and no experience using cost accounting software in a manufacturing environment. He isn’t remotely qualified to begin the process of developing SCA. Period. When an accountant launches his career, he has a choice: financial accounting or cost accounting. If you choose financial accounting (including public accounting), you are walking away from cost and will likely never see it again.

  10. “No one uses sustainable cost accounting to define what is an ethical investment. Therefore, why would more ethical investment mean more sustainable cost accounting?”

    All ‘ethical’ investing is a shakedown. Let me certify your investment fund is ‘ethical’, for a % of course. Spud just wants to get his nose in that trough, thats what SCA is.

  11. Wait while Murphy sets up another organisation which sets alternative accounting standards, and audits compliance with them, in his own terms, for a reasonable fee of course and an accreditation logo.

    Trebles all round!

  12. The high-cost end of the investment management industry has (or at least had) high hopes for ‘ethical’ investing (“it’s complicated, so you need to pay us a high fee to do it for you, rather than using one of those cheap index-tracking funds”).

    However, the genius of capitalism is such that the index-tracking firms are now starting to come up with their own cheap knock-off versions of ethical funds – almost as cheap as standard trackers. The investors in these funds will indeed be outsourcing their ethical judgement to Amundi or whoever, but for most this will be OK.

    There will be people who make a bit of money from providing/analysing data on the ‘ethicality’ of individual companies, but Murphy is very unlikely to be one of them, not least because there are more coherent competitors out there already. (For instance, Murphy’s stated primary focus for SCA is CO2 emissions: if you are interested in this – I don’t say that you should be! – the people at Carbon Tracker, using today’s conventional accounts, have already done work that is a quantum leap beyond anything Murphy is likely to achieve.)

  13. Off Topic. (Or perhaps not).

    I’ve just noticed that spud is giving a talk at my local university in a couple of weeks or so. It is titled “Can Capitalism Deliver Justice?”. I don’t know whether I should attend or not.

    The blurb about him includes “Richard’s work has been widely used by politicians and regulators. He was the creator of the country-by-country reporting concept that became one of the OECD’s recommended bases for reporting the taxable income of multinational corporations in 2014.”

    Is this a reasonable assesment?

  14. “Richard’s work has been widely used by politicians and regulators. He was the creator of the country-by-country reporting concept that became one of the OECD’s recommended bases for reporting the taxable income of multinational corporations in 2014.”

    Absolutely not. The idea of ‘country by country’ reporting was first developed in the 1970s. A UN commission recommended a requirement to publish financial reporting by MNCs at a company level and International Accounting Standard 14 “an accounting standard on segmental reporting” was introduced in 1980. Both are similar in concept to CbyC reporting. Additionally the “Extractive Industries Transparency Initiative” went down the same route although aimed at the extractive industries only. It was formed in 2002.
    Publish What You Pay is a campaigning organisation also calling for financial transparency in that same field. It was also set up in 2002 and was named after a section in a 1999 Global Witness report calling for the same thing.

    The idea that Spud ‘created’ the concept of CbyC reporting is laughable. It’s notable that he now rows back slightly from that claim, saying he created CbC reporting “in its current form”. More laughs as he has whined that the CbyC reporting being implemented by the OECD doesn’t go far enough.

  15. I’ve only had a brief look but CbyC reporting as it is being implemented by the OECD looks nothing like that proposed by Spud.

    He wanted mountains of information and that any MNC with consolidated third party turnover exceeding $15m dollars had to comply. He also wanted the information published publicly.

    The OECD CbyC reporting applies to consolidated turnovers above 750m Euros, asks for far less information and won’t be published publicly.

    He didn’t invent the concept and what he did write looks nothing like what is being implemented.

  16. Captain Potato has become a touchstone for that which should not be done. If he proposes it, supports it or claims to be the origin of it – avoid at all cost.

  17. “I can assure you that Richard is pansexual and without prejudice where he bestows his blessing”

    They talk of little else in Ely.

  18. @EasilyImpressed – you should absolutely attend. Just remember that if you get the chance to make any remarks that contradict his torrent you must also include somewhere the phrases “I don’t want fascism or a world killed for profit. . .”

  19. @dennis I had this discussion with him a few years ago about specialisation in accounting and that he failed to understand for CbyC reporting it’s intrinsic problems and the assumptions that would need to be made precisely because he had no cost accounting background
    His answer was that as a Chartered Accountant he had to do cost accounting exams as part of his qualification so was an expert on it, when I pointed out I was a CMA with 20years complex manufacturing environment experience etc. and still didn’t consider myself an expert on all facets of cost accounting and wouldn’t presume to lecture people on auditing or tax etc. I received the usual you are a troll messages.

  20. @Ducky McDuckface

    “ 22 adverts on this page”

    Surely you want to be amazed by Peter Beardsley’s (insert any other non entity)‘S net worth”?

  21. Bloke in North Dorset

    BniC,

    What was the pass mark on those accountancy exams?

    When I did an HND at the School of Signals we were told that although we could get the civilian qualification on 40% pass mark to pass the military side and therefore gain promotion and military appointment we needed an average of 50%. In some exams there were individual questions that had to be passed at 50%.

    The reasoning was that 40% pass really showed 60% ignorance.

  22. BniC

    ‘that’s your last comment here’

    Bravefart

    Anyone know what has happened to the ‘Fair Tax Mark?’

    BniC and Dennis – I don’t think based on my reading of his understanding of basic accounting principles that any firm requiring an accountant would employee him. I’m no accountant but part of previous roles involved preparation of budgets and so on and even concepts like depreciation seem completely outside his area of understanding. Would be impossible to say definitively given the seemingly endless stream of Female Guardian scribblers Tim brings attention to but he has to be among the most ignorant people opining in cyberspace today

  23. @Andrew C – thanks. I someone would be able to provide, err. some context.

    @Bongo – I will probably attend. Some here might be interested to know that most talks given to this particular organisation are recorded and placed on its web site (google KWAKU). So we will all be able to share his wisdom.

  24. Dennis, CPA to the Gods

    His answer was that as a Chartered Accountant he had to do cost accounting exams as part of his qualification so was an expert on it,

    And it is here that we get to the crux of the biscuit of what makes Richard Murphy Richard Murphy. The formal testing one must pass to become a CA (or a CPA) is a barrier to entry into the profession. That testing is not designed to determine expertise, only a minimum level of competency.

    Actually becoming a CA or CPA doesn’t confer expertise in any way, same or manner, and any CA or CPA who actually understands the ethical requirements of being a CA/CPA knows perfectly well that they are under an ethical obligation to not hold themselves out as having a level of professional expertise they do not actually possess. This is the part Richard Murphy doesn’t understand – or refuses to acknowledge. He is so lost in his own delusion of being the possessor of unrevealed knowledge and unique insight that he routinely violates the ethical norms of his profession.

  25. Dennis, CPA to the Gods

    I don’t think based on my reading of his understanding of basic accounting principles that any firm requiring an accountant would employ him.

    I doubt he could hired simply on the basis of being pompous, disrespectful and disagreeable. That being said, it is also my professional opinion that he does not possess the minimum level of competence in accountancy or taxation to be retain his designation as a CA.

  26. He claimed a couple of years ago to still be registered as practicing as he has a few old clients he still did work for, makes you wonder hows he’s meeting CPD requirements.

  27. Dennis nails it. And this had got little to do with CA/CPA etc, it’s relevant to anyone who – often early in their career – passes exams or tests, be they professional / apprenticeship / whatever. It’s awe inspiring that Murphy can say something as utterly stupid as he appears to have done.

    BniC

    CPD is proportional. If in practice you’re doing tiddly squat, then CPD simply has to be tailored to covering tiddly squat.

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