Musings on Accounting Research by Steve

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Monthly Archives: March 2015

Role of intuition in research

making leaps of logic and connecting disparate observations together is the stock in trade of any researcher who is not a ” gap filler”.  Yet some researchers focus so narrowly on that leap that they end up doing less than enlightening research as they did not step back and put that leap/insight or burning intuition into a broader setting!

Is the leap you made the key in the setting or is there another allied area where you can make more impact?  Is the setting addressable by theory or do you have to fly blindly into the research if you stay committed to the project?

In other words follow your intuition but do not be ruled by it!  Use these leaps as a starting place not an ending place.  And above all else know when to put an idea on the back burner until there is a time when conditions for success are better rather than running with a half- baked idea that people always remember for the uncooked part not the baked part!

EBAA – the answer is not an individual standard setter who is an academic

One of the solutions to date to try and help improve the input of academic research on standard setting is the appointment of an academic member of the standard setting body be it FASB, AASB, etc.

Yet given the amount of research, the differences in research methods, the complexity of making analogies from research that might be related and informative but is not directly on point, it is impossible for any academic member of a standard setting board to be able to bring all relevant research into standard setting.

So while a nice idea, and maybe even a necessary condition, the appointment of an academic member (even the most brilliant of academic minds) is not going to solve the issue of moving standard setting to being at least partially based on the evidence that is available in the vast set of research on various auditing and accounting topics.  Hence, even well intentioned standard setting bodies who pick the best available minds are not going to get someone who is able to synthesize all the research that might bear on a topic.  Yet sometimes I have seen that such bodies do not even get this far as they search for someone that can fill the position in form (i.e. they are an academic at a suitable university with some publications but exhibit an interest in standard setting and practice rather than research).  PLEASE note that I have a specific Canadian instance  (actually several) in mind here, nothing international or US based albeit no doubt they exist!  So while a hats off to this idea, we now have almost 25 years of experience with academies on standard setting boards around the world and that has proven to be insufficient to bring on a consistent basis the best research consensus to bear on accounting and auditing standard setting.

Evidence based accounting standard setting

After 45 plus years of financial accounting and auditing research one might think that we would be more systematic about conveying the broad consensus about research findings to those who set standards.

Yet while there are individual anecdotes about the influence of research on standard setting, as a research community we have not yet dealt with the fundamental communication problem of how do we package research results in as an objective manner as possible to inform standard setters.

Further, we have not as of yet developed the skills of standard setters to be able to understand what such a communication says, even if one were made.  Instead we have a culture where standard setting staff looks for individual research studies that will inform what they are doing.  Given the limits of  any one research study, they are bound to be frustrated as they cannot find “the answer.”  Of course they cannot because no one study is going to solve a problem and it certainly is not going to provide the consensus of the evidence.

Years ago (over 25) medicine had similar problems with “expert consensus” being employed  instead of the research evidence in determining treatment protocols and standards of care.    What they found in medicine was shocking – consensus leading to deaths of thousands of patients through the suggestion of inappropriate or ineffective or indeed detrimental treatment (for a more recent example see JAMA. 2000 Jul 26;284(4):483-5.).

“Expert consensus” readily translates into our world of accounting and auditing as standard setters. Fortunately, we do not cause death in accounting and auditing when standards are not based on the best available evidence – albeit we may cause “death” by misadventure in corporations and others that suffer from misclassification as being credit unworthy or failing to detect detectable fraud among other causes.

From time to time I will be turning to this theme as I truly believe we need to consider the “evidence based movement” and what it can tell us about how we can communicate better and how to teach recipients of the communications to understand what is communicated.  NOTE:  This is not the start of another “it is all our fault” polemics like we have had in the past from various “leaders” in academic accounting (e.g. Kaplan 2011).  Just like in medicine (where among accounting researchers there is the myth that doctors read original research) we have to give thought as to how to convey this information and how to educate the recipient about how to receive it.  After all, communication takes two parties who want to talk to each other.


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