Peeling away financial reporting issues one layer at a time

Grilled Accounting Onions

Rob Nance of iShade, the online accounting network, recently interviewed me for his own blog.  With Rob’s permission, I’m repeating (with some minor edits to my responses) his post, below.

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Ever read The Accounting Onion? It’s a great addition to our profession’s giant accounting sandwich. Find out more about its creator, Tom Selling PhD, CPA, in this delightful, informative interview. You’ll never think about an onion the same way.

Q: What would you most like the accounting profession to know about what’s going on in Washington D.C.?

Ever since the FASB and IASB have embarked on convergence, it seems that the SEC has disengaged itself from the accounting standard setting process. The result, I believe, is that FASB projects take forever; because there is no longer a credible threat that the SEC could preempt a stalled or misdirected process by issuing its own guidance. For example, it seems that pretty much everyone thinks that bankers, and not the SEC, are effectively the clients for the proposed loan impairment standards. The bottom line is that I don’t think the SEC is doing its part to ensure that low-quality accounting standards will not play a role in any future financial crisis.

Q: How did The Accounting Onion come about?

I took early retirement from university teaching about seven years ago. I have to say that the 25-year cumulative effect of petty politics was becoming unbearable; so I reluctantly left classroom teaching to focus on my consulting practice and a software company I had started with two other partners. I knew that a web presence would be essential for visibility and networking, and I had also discovered that search engines particularly favored blogs, ostensibly because of the relatively more current content that blogging generated — as opposed to static websites. But, those practicalities aside, I think that blogging was also providing me with a source of stimulation that I missed by no longer being in academia on a day-to-day basis.

Q: I love how you describe The Accounting Onion with the line: “Peeling away financial reporting issues one layer at a time.” What motivates you to keep that garden growing?

I don’t know if “motivation” any longer describes what drives me to blog. It feels more like an addiction! Seriously, I do miss the classroom, and I’m fortunate that blogging to inform my readers – and perchance to provoke decision-makers – has been a very fulfilling experience for me. You’re supposed to blog about what you know, and I was worried at first that I would run out of pet peeves to write about in fairly short order. But, even though my perspectives and philosophy on financial reporting have stayed relatively fixed, events like the financial crisis, international convergence and other regulatory developments continue to add to the complexity and uncertainty of the financial reporting environment. For me, as a blogger, it’s been like a gift that keeps on giving.

Q: The world of accounting has obviously changed dramatically during your lengthy career. What has surprised you in terms of what public accounting firms have done (or not done)–both positively and negatively?

Our professional ethics rules emphasize that the “P” in CPA is paramount. Our government-granted franchise as gatekeepers to the public capital markets must be predicated on the principle that conscience, rather than the financial bottom line, will drive our actions as professionals— both individually and through our firms. This, I believe, is the real “expectations gap.” Everybody knows to a certain extent that, even in ideal circumstances, audits and other assurance services are not panaceas. But, perhaps starting with the Enron debacle, the public is coming to realize that there is little to differentiate the motives and actions of the AICPA from other powerful and widely-resented political lobbies. I have been a member of the AICPA for about 35 years, and this more than anything disappoints me.

On the bright side, though, I never cease to be amazed at the quality of reference resources that the international firms put out on the web for free. The Accounting Standards Codification by the FASB has largely been a very positive development; however sometimes it can make both new and old standards more difficult to read, in part because the topical organization of the Codification means that the main message of a standard is dispersed and no longer self-contained in one relatively readable document. Perhaps, the firms realize this shortcoming, and that’s one reason why they do such an excellent job of providing summaries, detailed explanations and examples. It seems like the firms compete with each other to have the highest quality free materials, and I am extremely grateful for that.

Q: What have been some of the key things you’ve learned throughout your career? What might you do differently if you could go back in time?

That’s a difficult question for me to answer, because I’ve always enjoyed my work and have had a great life, in no small part due to my wonderful family. I really do consider myself extremely fortunate to be able to enjoy learning and working. I suppose there are times when I could have been more diligent or humble enough to admit my ignorance and seek one-on-one support. I have come to realize that conventional education formats were not always the most suitable learning environment for me. I think that’s why I have a lot of empathy for students who don’t get the message the first time around, and it’s also why the emergence of new learning technologies excites me, and it makes me want to try them in a classroom setting.

Q: What’s in the future for Tom Selling?

I wasn’t kidding when I said that blogging had become an addiction! I’m not getting any younger though, and I would really like to transition from consulting to serving on audit committees of boards of public companies.

Also, I recently accepted a part-time position at SMU where I’ll be teaching accounting theory and M&A to both their MBA and accounting students. The prospect of going back into the classroom makes me just as excited about my future as the day I realized that I had changed my last diaper.

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Thanks, Rob.  And, don’t forget to check out iShade.

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