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Complete book on first aid.

The accounting standardization project, kicked off by the passage of US securities laws in the 1930s, has steadily gained momentum over seven decades. Today, written standards dominate accounting thought, practice, regulation, instruction, even research. Generally accepted accounting principles - originally a mere description in its plain English meaning - have since been capitalized into a proper name - Generally Accepted Accounting Principles - and the phrase now describes rules and regulations issued by authorities with power to inflict punishment on those who do not choose to accept them. How and why did financial reporting get caught in the standardization project, replacing social norms of corporate and professional behavior by written rules and standards? What are the consequences of this transformation? What alternative courses are available to accounting and corporate governance? I argue that heavy reliance on the codification of financial reporting has been a wrong path. A shift from rules towards norms of behavior may yet help accounting and corporate governance recover a better balance.

Yuji Ijiri was a polymath and pioneer who gave us better understanding and methods of accounting and management. His theories of measurement, aggregation, and double- and triple-entry bookkeeping built an enduring foundation for the discipline and practice of accounting.

Historically, norms of accounting played an important role in corporate financial reporting. Starting with the federal regulation of securities, accounting norms have been progressively replaced by written standards. While social norms are maintained through an informal process of social as well as internal sanctions, standards require more formal enforcement mechanisms, often supported by implicit or explicit power of the state to impose punishment. The spate of accounting and auditing failures of the recent years raise questions about the wisdom of this transition from norms to standards. Many aspects of family, local, professional, social, national and international behaviors continue to be governed by mechanisms in which norms play an important role. It is possible that the pendulum of standardization in accounting may have swung too far, and it may be time to allow for a greater role for social norms in the practice of corporate financial reporting.

Financial reporting environment of the world is dominated today by a top down push for uniform financial reporting standards. The advantages of uniformity and monopoly standards have been well-publicized compared to their disadvantages. No language, accounting included, can flourish under the protective umbrella of punitive authority of state. Like languages and dictionaries, accounting and other social phenomena develop best through bottom up processes. We do not have enough the design knowledge to set standards whose consequences cannot be undone by adjusting transactions. Elimination of alternative accounting treatments prevents credible revelation of information through financial statements. Codification of accounting diminishes the judgment-honing function of class room discourse to promote rote memorization that drives away talent from the profession. Introduction of regulatory competition among alternative sets of financial standards may help improve accounting practice.