Adverse Effects of Accounting Uniformity on Practice, Education, and Research 1

Abstract

The pursuit of uniform written standards at the expense of social norms diminishes the effectiveness of financial reporting in stewardship and governance, and in better informing security markets. Uniformity discourages thoughtful classroom discourse, attracts less talent to accounting programs and, ultimately, to the accounting profession. Uniform standards induce a follow-the-rule-book attitude among accountants at the expense of developing their professional judgment. Since judgment and personal responsibility are the hallmarks of a learned profession, the pursuit of uniform written standards weakens the accountants’ claim to belong in this class, as well as the claim of accounting degree programs to belong in universities alongside architecture, dentistry, engineering, law, medicine, and nursing. Uniformity discourages research and debate in academic and practice forums. Most importantly, uniformity encourages increasingly detailed rule-making and shuts the door on learning through experimentation, making it difficult to discover better ways of financial reporting through practice and comparison of alternatives. Improving financial reporting requires creating a careful balance between written standards and unwritten social norms.

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