Performance standards, Participation, Informed agents, Information systems

My assignment is to analyze the development of accounting thought and its position within the university. The focus is on the expected development in the next 20 years, despite the fact that that is an impossible task. I will ruthlessly extrapolate from my personal observations of the activities in the accounting community. In doing this, I will deal with accounting research, the relationship between research and teaching within the field of accounting, and the relation to other disciplines in the business school. This will be done in three steps. I will give a brief review of the recent history of accounting thoughts, then comment on current status of 2016, and, finally, give some perspectives. The road ahead is going to be bumpy as many institutional barriers are in the way. This has to change for the accounting academics to retake their space in the academic community.

Accounting should pay more attention to errors, as errors are essential for the updating of beliefs. Accounting is an information system, and errors are the carriers of information according to Bayes’ Theorem. Accountants are primarily concerned with the mean (value), but the variance of accounting numbers is equally important. Only autocorrelation makes historical accounting relevant for decision purposes. Endogenous errors of accounting are more common than acknowledged. First, the accounting model is linear, whereas the world is nonlinear. Second, accounting is not the only information channel, and accountants must consider the role of accounting when it supplements other information sources. This commentary discusses the consequences of endogenous errors. Errors are inherent to accounting, and accountants must address them.

Profit allocation, Ancillary Trade, Decentralization, Coordination